Business Tax Planning

The 5 Tax Moves That Can Save Small Business Owners Thousands Before Filing Season Hits

by
Wes Kirtz
on
12/3/2025
The 5 Tax Moves That Can Save Small Business Owners Thousands Before Filing Season Hits

Many small business owners think tax season starts in January. But the reality is that the biggest money-saving opportunities happen long before a return is ever filed. Once the year closes, your options shrink dramatically, but with proactive planning throughout the year, you can reduce your tax burden, improve cash flow, and avoid the scramble that so many entrepreneurs face during filing season.

Whether you’re a solo operator or running a fast-growing team, here are the five tax strategies every small business should revisit before year-end and throughout the next tax cycle.

1. Review Your Estimated Payments to Avoid Penalties

Many owners don’t realize how much underpayment penalties can cost until they receive an unexpected notice. The IRS expects quarterly estimated payments from most small businesses and self-employed individuals, and falling behind—even unintentionally—can lead to penalties and interest.

Take time each quarter to compare your year-to-date income against what you’ve already paid. If your revenue fluctuates from season to season, you may need to adjust. A mid-year or early winter check-in with a tax professional can help you recalculate your estimates and avoid surprises in April.

2. Maximize Available Deductions Before December 31

By far one of the biggest advantages business owners have is the ability to control the timing of expenses. Strategic purchasing and planning before year-end can significantly lower taxable income.

Consider reviewing:

  • Equipment purchases: Section 179 and bonus depreciation may allow immediate expensing.
  • Technology upgrades: Software, computers, and tools used for your business are often deductible.
  • Mileage and travel logs: Ensure records are updated before the year closes.
  • Professional development: Courses, certifications, and conferences tied to your industry may be eligible.
  • Retirement contributions: Solo 401(k) or SEP IRA contributions can reduce taxable income—especially in higher-earning years.

Even a few well-timed expenses can reduce your tax bill while also strengthening your business’s operations.

3. Reevaluate Your Entity Structure as Your Business Grows

A business entity isn’t something you set once and forget. As your income, team, or strategy changes, the best entity for tax purposes may shift. Many small business owners find that as they grow, their original entity choice (often a sole proprietorship or basic LLC) no longer supports their tax strategy.

For example:

  • Some businesses may benefit from being taxed as an S-Corporation, which can reduce self-employment tax with the right “reasonable compensation” strategy.
  • Partnerships might need updates to operating agreements or profit-sharing structures.
  • LLCs may want to revisit whether their classification still aligns with projections.

Entity structure plays a huge role in tax liability. A proactive review—especially toward the end of the year or during significant growth periods—can produce substantial tax savings.

4. Separate Personal and Business Finances (If You Haven’t Already)

This is one of the most common and costly mistakes small business owners make. Mixing accounts creates messy records, missed deductions, and potential compliance issues. It can also complicate audits, due diligence, or attempts to secure funding.

If you haven’t separated your banking, credit card, and financial tools, do it now, not next year. Clean separation makes bookkeeping faster, tax preparation smoother, and financial reporting far more accurate.

If your books are backlogged because you’ve been mixing expenses, don’t wait until tax season to fix it. A bookkeeping cleanup early in the year helps your tax professional file accurately and could reduce your tax liability.

5. Use Your Books to Plan, Not Just Report

Most small business owners only look at their books when something breaks: a tax deadline, a loan application, or a sudden cash crunch. But clean, up-to-date books allow you to forecast revenue, plan hiring, evaluate your pricing strategy, and make data-driven financial decisions all year long.

Regular bookkeeping and monthly reconciliations unlock clarity around:

  • Real profit vs. perceived profit
  • Cash flow fluctuations
  • Tax exposure
  • Opportunities for deductions
  • Seasonal trends
  • Budgeting and goal planning

If you’re only reviewing your books once a year, you’re missing opportunities to strengthen your business’s financial health every month.

Tax season shouldn’t feel like a fire drill. With the right planning, the right structure, and updated financials, small business owners can enter filing season confident and prepared. Whether you’re trying to reduce tax liability, avoid IRS penalties, or gain better visibility into your numbers, proactive work now pays off later.

If you haven’t reviewed your books or tax strategy recently, now is the perfect time to take action. Book a free discovery call with Bookkeeper.com today to see how our expert team can get you ready for tax season.

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Wes Kirtz

Wes Kirtz

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