You finally get a quiet moment to look at the business account. There is money in it. You made payroll, your clients are paying, and the year is turning out better than you expected. You deserve to enjoy that progress.
Then comes the question: how much of that money is actually available to use? Year-end tax planning helps you answer before you commit it elsewhere. Through my proprietary LIFT – Legal, Insurance, Financial & Tax framework, I help you connect that tax conversation to the business and life you are building.
You do not need to become a tax expert. You need a forward-looking conversation with your CPA or other qualified tax professional, current information, and enough time to carry out the decisions you make together.
Year-End Tax Planning Is a Different Meeting From Filing Your Return
Your tax return reports what happened. A planning meeting asks what you expect to happen next and which decisions are still available. Your CPA may provide both services, but do not assume a tax-preparation engagement automatically includes a year-end projection.
Ask directly: “Can we schedule a meeting to project this year’s taxes and identify decisions I should make before year-end? What information do you need, and is that work included in our engagement?”
Late October or early November is a useful target. It gives you time to gather records, compare options, and coordinate with payroll or a retirement-plan provider. If a decision has an earlier deadline, ask about it now rather than wait for the meeting.
This is not a claim that every opportunity disappears when the calendar turns. For example, the IRS allows a SEP retirement plan to be established by the business’s tax-return deadline, including extensions. Other elections, payroll actions, or plan requirements follow different timelines. Your meeting should produce the deadlines that apply to you.
The bottom line: Put planning on the calendar as an explicit service, with time to act on the advice before the relevant deadlines.
Bring Four Numbers, Not Just Your Bank Balance
You do not need perfect projections to start the conversation. You do need records that distinguish what has already happened from what you expect. Bring current financial statements, last year’s return, and these four numbers or the records needed to calculate them.
- Your projected taxable income. Revenue is not profit, and business profit is not necessarily your household’s taxable income. If you file jointly, your spouse’s wages and other income belong in the projection too. Ask your CPA to calculate the relevant figure rather than guess from your checking account.
- What you have already paid. Gather federal and state estimated-payment confirmations and current withholding records for you and, if applicable, your spouse. Include payment dates. Taxes generally must be paid as income is earned or received, not simply whenever you file.
- Last year’s total tax. Bring the return itself, not just the amount you paid when you filed. A $4,000 filing-time balance is not the same thing as a $40,000 annual tax liability.
To avoid an underpayment penalty, the IRS generally looks at whether you paid at least the smaller of 90% of this year’s tax or 100% of last year’s tax. The latter rises to 110% if prior-year adjusted gross income exceeded $150,000 ($75,000 if married filing separately). Your CPA should check eligibility and payment timing. Paying enough by year-end may not prevent a penalty if earlier installments were late.
- Your retirement contributions so far. Identify contributions already made, payroll elections in place, and additional cash you could realistically commit. Ask what your plan permits and what employee contributions, administrative work, or other costs an employer contribution would require.
Eligible employees change the math. Most SEP plans require employer contributions at the same percentage of compensation for each eligible participant, including you. Your CPA should check the compensation calculation, especially if you are self-employed.
If your records stop in June, your first task is getting them current. A projection built on missing expenses or unrecorded income gives you less useful information, even when the person doing the calculation is excellent.
The bottom line: Give your CPA a current picture of income, payments, prior-year tax, and retirement funding so the meeting can produce decisions rather than a search for missing records.
The Question That Matters More Than “What Can I Write Off?”
Start with a baseline: “If I make no additional changes, what do you project I will owe, and when will I need to pay it?” Then ask what reasonable alternatives would change that result.
For a simple illustration, suppose your projected federal tax is $60,000, you have paid $38,000, and another $8,000 will be withheld before year-end. That leaves a projected $14,000 difference. It is a cash-planning estimate, not a calculation of whether your installments were timely or whether you owe a penalty.
Learning that number now gives you a choice about cash you might otherwise distribute, invest, or spend. Ask your CPA to separate the amount needed to satisfy payment requirements from the total amount you expect to owe. Those are not always the same number.
Then ask these questions:
- Which deductions or credits depend on my projected income, and am I near a relevant threshold?
- Would an affordable retirement contribution change the outcome, and what are its costs and deadlines?
- Should withholding or estimated payments change, considering the timing of income and payments?
- What information would change this projection, and when should we update it?
For eligible business owners, the qualified business income deduction is one example of a rule affected by taxable income and other limitations. The IRS describes a deduction of up to 20% of qualifying income, not an automatic 20% deduction for every business. Ask whether it applies to your actual circumstances before trying to get “under a threshold.”
And resist buying something solely because it is deductible. In a deliberately simplified example, a fully deductible $10,000 purchase at a 24% marginal federal rate reduces federal income tax by $2,400, ignoring other tax effects. You still spent $7,600 after that benefit. The purchase needs a business purpose beyond making the tax bill smaller.
The bottom line: A useful tax strategy supports a decision worth making, with the tax effect, cash requirement, and deadline understood in advance.
One Tax Decision Touches Four Parts of Your Business
When I review your plans, I want the tax recommendation to fit the rest of your business. A deduction is one consideration, not the entire decision. Here is how the four systems connect.
Legal
If the plan involves changing compensation, hiring a family member, adding an owner, or purchasing equipment, ask what agreements, approvals, and records are needed. Your tax professional evaluates the tax treatment; I help you address the legal structure and obligations. Neither of us should have to discover the decision after you have already implemented it.
Insurance
A planned equipment purchase, new employee, or expanded service can change what the business needs insured. Before you commit, ask your insurance professional whether the change affects coverage, limits, or premiums. Include those costs when deciding whether the purchase or expansion serves your goals.
Financial
Compare the strategy with payroll, debt payments, operating reserves, and your household needs. A $30,000 retirement contribution is not comfortably funded just because the account holds $35,000 today. If $20,000 of payroll is due next week, the timing needs attention before you move the money.
Tax
Ask your CPA to document the expected treatment, eligibility requirements, implementation deadlines, and assumptions behind the projection. Retirement-plan rules, entity type, employee coverage, and state taxes can change the answer. If payroll or a plan administrator must act, confirm who will contact them and by when.
The bottom line: Legal, insurance, financial, and tax decisions need to support the same business goal, not compete for the same cash without anyone noticing.
Every Decision Leaves the Room With an Owner and a Date
Before the meeting ends, turn each decision into an action: what happens, who owns it, what it costs, and when it must be completed. “Consider increasing retirement contributions” is a discussion point. “Request the plan administrator’s contribution calculation and implementation deadlines this week” is a next step.
Set a follow-up trigger too. A new contract, delayed payment, unexpected expense, or change in your spouse’s income can make the original projection stale. Ask when your CPA wants updated numbers rather than treat the estimate as a promise.
This protects your TEAM: Time, Energy, Attention, and Money. You spend less of each reassembling records in a rush, and more making decisions with the people qualified to help you.
The bottom line: The value of the meeting comes from the decisions you understand and the actions someone actually completes.
LIFT Business Breakthrough Session: What You Can Do Right Now
Send your CPA a request for a year-end planning meeting this week. Ask what records they need, what the service includes, and whether any decisions need attention before your appointment. You can begin with the four numbers above instead of an open-ended request to “save me taxes.”
As a Personal Family Lawyer Firm and LIFTed Business Advisor, I help you connect your business decisions with the legal, insurance, financial, and tax systems supporting them. I do not replace your CPA or offer one-size-fits-all plans. I help you identify where coordination is needed so you can protect your TEAM and the future your business is meant to support.