The Year-End Tax Moves That Set the Tone for 2026

There’s a moment every December when business owners start to feel the clock and time speeds up. It’s not just the holiday rush or the Q4 push, but the quiet thought that taxes are lurking around the corner in the dark shadows of winter. What should be the most wonderful time of the year can become the stuff of nightmares without some preparation!

Year-end planning is an opportunity to shape the story of the year before the numbers lock in. Every strong tax year I’ve ever seen started in November and December, not April. Before the year ends, there’s still time to be proactive and adjust direction. Once the ball drops and the clock strikes midnight, there are fewer options to do “planning” and money gets left on the table.

Setting Direction Instead of Chasing Deductions

There’s a misconception that year-end planning is all about squeezing in deductions and pulling out the credit card before 11:59PM on 12/31/2025. That mindset causes more damage than it fixes.

When I sit down with a client in December, I care about one thing:
Does this decision strengthen the business going into next year?

If the answer is no, we’re not doing it.
If the answer is yes, it becomes part of the plan.

That clarity alone saves people from a lot of careless, rushed decisions. During a time of year when we all have decision fatigue, just slowing down and thinking through something together creates clarity.

1. Aligning Income and Expenses with Intent

This is one of the most underutilized tools for tax planning. When you understand your numbers well enough to adjust timing with purpose, you create flexibility. You’re deciding when revenue lands, not just how much you made. You’re deciding when expenses hit, not just what they are.

For example:
If you’re having a stronger year than expected, pulling forward key expenses can soften the tax impact. My rule of thumb is if you anticipate needing something within the first six months of the next year and can accelerate the purchase, go for it.
If next year will be heavier, deferring income may give you more room to plan.

What matters is that the shift reflects the reality of the business, not a guess or a panic move. When timing aligns with intent, January doesn’t blindside you.

2. Making Retirement Decisions Before They Become a Constraint

Retirement planning is part of tax planning. And December is when those choices set the framework for next year.
I push clients to think about:

• What’s the right plan for the stage they’re in? Somebody getting close to retirement with excess cash is usually a good candidate to max their retirement plans.
• Are contribution limits being used how they should? How does your business retirement plan coordinate with other retirement vehicles you or your spouse may have available?
• Is the business funding structure supporting or hindering long-term goals? The same retirement plan you put in place when you started your business may no longer be appropriate now that you have a team of 15 employees.

The earlier you begin thinking about this, the more room you give yourself to execute without stress. And when retirement planning is handled well, it often creates one of the most meaningful tax benefits available. Be warned, however, some retirement plans have additional compliance and may require even earlier adjustments than a mid-December call with the CPA.

3. Checking Entity Structure Against the Current Business

Businesses evolve quickly. Entity structures do not.

You may have launched as an LLC when the business was small.
You may have elected S-corp treatment when labor costs were low.
Then growth arrived, but the structure stayed the same.

December is when I ask the questions people don’t think about during busy season:

• Does this structure still support where the business is going?
• Are you paying yourself in a way that matches reality?
• Has ownership changed in a way that affects planning?

A quick review often reveals opportunities to reduce tax and improve how the business functions day-to-day. Sometimes the fix is simple. Sometimes it sets the stage for a major shift. Either way, you want that clarity before the new year begins.

4. Creating Documentation That Protects the Work You’ve Done

Documentation is one of the most underrated parts of tax planning. You can have the best strategy in the world, but if the story behind it isn’t clear, you’re vulnerable.

I tell clients this plainly:
If you can explain why you took a position, you should document it now, while the year is still fresh.

That includes:

• Significant purchases
• Board or owner decisions
• Compensation adjustments
• Loans or capital contributions
• Any strategy that hinges on intent

It’s not paperwork for the sake of paperwork. It’s protection. It’s the difference between confidence and reconstruction if the IRS has questions later. Additionally, if you ever want to exit your business, a savvy buyer will also require some of these items as part of due diligence, so you may as well start planning your legacy now!

5. Building a Tax Payment Plan That Doesn’t Break Q1

This step may not sound exciting, but it is where financial health shows up. A predictable cash flow creates opportunity and provides peace of mind.

When we map payments ahead of time, clients start the year knowing:

• What they owe
• When they owe it
• How it fits into upcoming cash needs
• Whether they should adjust distributions, payroll, or spending

Planning removes volatility. Volatility is what kills momentum and creates fear.

I’ve seen businesses make better strategic decisions simply because tax payments were predictable instead of disruptive. Sometimes the best tax plan for a business is simply making quarterly payments on time.

The Real Goal of Year-End Planning

Year-end planning is a clean starting point for a year that begins with control rather than reaction.

The business owners who get ahead in January know what the numbers say, what the tax position looks like, and what adjustments they’ve already made to stay on course. Nobody needs additional drama at the holidays (let’s save that for the dinner table!). My favorite tax returns are the ones I already know how to do in December. Instead of calling a client on April 15 with bad news, we can put a neat bow on the prior year and move forward with confidence.

If you want to walk into 2026 with that level of clarity, reach out. I’m here to help you sort through the year, understand your position, and put a clean plan in place before the calendar turns.

About Dark Horse CPAs

Dark Horse CPAs provides an integrated suite of services including tax, accounting, fractional CFO, and wealth management to small businesses and individuals across the U.S. The firm was established to transform the client experience by offering personalized, high-quality services that small businesses and individuals deserve. As Dark Horses in their industries, these businesses benefit from advanced tax strategies and accounting insights typically reserved for larger companies. With a nationwide presence and a team of dedicated professionals, Dark Horse CPAs is committed to your success. Get a quote today.