Year-End Tax Prep Checklist for Small Businesses
The last quarter of the year is when smart small business owners lock in tax savings. This month-by-month checklist walks you through every task from initial planning in October through filing prep in January, so nothing falls through the cracks.
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October-November: Planning Phase
5 tasks · Set the foundation for year-end savings
Review year-to-date P&L and estimate annual income
Pull your profit & loss statement through the current month. Project revenue and expenses for the remainder of the year so you have a realistic estimate of taxable income. This number drives every other decision on this list.
Calculate estimated tax remaining
Compare what you've already paid in quarterly estimated taxes against your projected liability. If you're short, you still have time to make an additional payment before the January 15 deadline to avoid underpayment penalties.
Identify deduction opportunities before December 31
Look for expenses you can legitimately accelerate into this tax year. Common opportunities include prepaying rent, stocking up on supplies, or making charitable contributions. Every dollar of deductions reduces your taxable income.
Review retirement contribution room (SEP-IRA, Solo 401k)
SEP-IRAs allow contributions up to 25% of net self-employment income (max $69,000 for 2024). Solo 401(k) plans allow employee deferrals plus employer contributions. Maximizing retirement contributions is one of the most powerful tax reduction strategies available.
Evaluate S-Corp election for next year
If your net self-employment income consistently exceeds $50,000-$60,000, an S-Corp election could save you thousands in self-employment tax. The deadline to elect S-Corp status for next year is March 15. Start the analysis now so you can act in January.
December: Action Items
8 tasks · Execute your tax-saving strategies before the deadline
Prepay expenses that are deductible this year
If you use the cash method of accounting, expenses are deductible when paid. Consider prepaying January rent, insurance premiums, or software subscriptions before December 31 to pull deductions into the current year.
Make retirement contributions
Solo 401(k) employee deferrals must be made by December 31. SEP-IRA contributions can wait until your tax filing deadline, but contributing now locks in the deduction and gets your money working sooner.
Purchase needed equipment (Section 179)
Section 179 lets you deduct the full cost of qualifying equipment and software in the year of purchase instead of depreciating it over time. The equipment must be purchased and placed in service by December 31. The 2024 limit is $1,220,000.
Send invoices or defer income strategically
If you expect to be in a lower tax bracket next year, consider delaying invoices until January so the income falls into the next tax year. Conversely, if next year looks higher, accelerate collections now. Cash-basis taxpayers recognize income when received.
Review accounts receivable aging
Identify overdue invoices and make a final collection push. For truly uncollectible debts, document your write-off. If you use the accrual method, bad debt deductions require proof that the debt is worthless.
Reconcile all bank accounts through November
Ensure every bank and credit card account is reconciled through at least November 30. This catches missing transactions, duplicate entries, and categorization errors before year-end close. December reconciliation can happen in early January.
Organize receipts and documentation
Gather and digitize all paper receipts. Match receipts to transactions in your books. The IRS requires documentation for all business deductions. Missing receipts now become audit risk later.
Schedule your CPA meeting
Book a year-end planning meeting with your tax preparer before the holiday rush. A 30-minute call in mid-December can surface last-minute strategies. Waiting until February means you've missed the window for most year-end moves.
January: Filing Prep
8 tasks · Close the books and prepare for filing
Collect all 1099s received
Clients and platforms that paid you $600 or more must send 1099s by January 31. Track what you've received against your income records. Follow up on any missing forms. Note: you must report all income regardless of whether you receive a 1099.
Send 1099-NECs to contractors (due January 31)
If you paid any individual contractor $600 or more during the year, you must file Form 1099-NEC with the IRS and send a copy to the contractor by January 31. Late filing triggers penalties of $60-$310 per form.
Gather W-2s
If you paid yourself a salary (S-Corp owners) or had W-2 employment income, collect these forms. Employers must issue W-2s by January 31. You need these to reconcile total income on your return.
Finalize December books
Reconcile all December bank and credit card statements. Post any year-end adjusting entries. Review the full-year P&L and balance sheet for accuracy. Once finalized, lock the prior year so no accidental changes occur.
Generate year-end financial statements
Produce your final Profit & Loss statement, Balance Sheet, and Cash Flow Statement for the full year. These are the foundation for your tax return and provide the numbers your CPA needs.
Compile deduction documentation
Create a summary of all deductions by category: office expenses, travel, meals (50% deductible), insurance, professional services, etc. Attach supporting receipts and records. The cleaner your documentation, the faster and cheaper your tax prep.
Calculate home office deduction
Measure your dedicated office space and calculate total home expenses (mortgage/rent, utilities, insurance, repairs). The simplified method allows $5 per square foot up to 300 sq ft ($1,500 max). The regular method uses actual expenses prorated by square footage.
Tally vehicle mileage
Total your business miles for the year from your mileage log. The 2024 standard mileage rate is 67 cents per mile. Compare the standard rate against actual vehicle expenses to determine which method gives you a larger deduction.
Your Progress
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Key Deadlines to Remember
Related Guides
Tax Deduction Checklist
100+ deductions organized by category with IRS form references.
Quarterly Tax Schedule
All deadlines, worksheets, and safe harbor rules.
SE Tax Calculator
Calculate your self-employment tax liability instantly.
1099 Filing Checklist
Who to 1099, thresholds, and step-by-step filing.
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