There’s something about the final stretch of the year that makes business owners reflect. You start looking at sales, expenses, goals — and then you realize what’s coming next. The tax bill.
For many, that realization hits sometime between the office holiday party and the New Year’s Eve countdown. But here’s the good news: if you understand how money moves in your business, you still have time to change how that story ends before the ball drops.
Smart business owners don’t wait for April to figure out their taxes. They act in December, when every strategic move still counts. The goal isn’t to “spend money to save money,” but to reposition your income, redirect your growth, and use the tax code to your advantage — the same way the wealthy have done for decades.
Let’s look at how to do that without guesswork or gimmicks.
Understanding the December Advantage
The last weeks of the year are not just about wrapping up your books — they’re about writing the ending you want for your tax story. The IRS measures income and deductions by calendar year, which means once January 1 arrives, most of your options are gone.
That’s why experienced tax strategists call December “the finish line that decides how painful April feels.”
Let’s say your business had a profitable year. You could sit on that profit and pay full tax in April. Or, you could redirect a portion of it into assets, growth, or retirement — places where your money works for you instead of Uncle Sam.
The difference? Timing.
Should You Put Money Into Growth?
Most small-business owners assume “growth” means spending more. Not exactly. It means positioning your resources in ways that strengthen your business and reduce taxable income.
Think about a small marketing agency that’s had a solid year. Their owner, Lisa, expects to owe about $40,000 in taxes. Instead of paying that entire amount to the IRS, she invests $25,000 in upgraded equipment and software that expand her client capacity. Because those assets are placed into service before December 31, she qualifies for Section 179 or bonus depreciation, allowing her to write off the full cost this year.
Lisa hasn’t wasted money. She’s simply moved it from the “taxes due” column into an “asset that earns.” That’s what smart growth looks like.
Turning Profit Into Assets Instead of Taxes
One of the best ways to cut your tax bill is to shift money from taxable income into appreciating or income-producing assets.
Imagine buying commercial real estate your company already rents. Instead of losing money to rent each month, you build equity while gaining depreciation — one of the most powerful tax tools available.
Depreciation allows you to deduct part of an asset’s cost each year, even while it increases in value. When used correctly (and legally), it can offset large portions of business income.
Another example: investing in manufacturing or professional equipment before year-end. The IRS requires the asset to be placed in service before December 31, meaning it’s ready and available for use, not sitting in a warehouse waiting for setup. That’s the key phrase that makes the deduction count this year.
The wealthy understand that buying the right assets at the right time isn’t an expense — it’s a reallocation. You’re simply changing who benefits from your money: the IRS or your balance sheet.
Create a Special Offer Before Year-End
Here’s a simple but often overlooked strategy: generate income on paper now, while delaying the cash collection until next year.
If you’re a cash-basis taxpayer (most small businesses are), income is recognized when you receive payment, not when you issue an invoice. So imagine creating a “Year-End Special” — a pre-sale or deposit campaign that lets clients lock in next year’s pricing if they pay after January 1.
For example, a consultant could email clients in December offering a discounted strategy session for $2,000 if booked by year-end but payable by January 31. That secures new business for Q1 without inflating December income.
Meanwhile, you can still prepay legitimate expenses in December — things like insurance premiums, professional fees, or advertising — to reduce taxable income now. The IRS allows prepayments if they relate to services within the next 12 months.
The result: lower taxable income in December, stronger sales momentum for next year, and a smoother cash-flow start to January.
Have You Looked at Retirement?
If you haven’t reviewed your retirement strategy, the final quarter of the year is prime time. Retirement plans are one of the last legal ways to move money out of your tax column while building long-term wealth.
You can still set up a plan like a Solo 401(k) or a SEP-IRA by December 31 and make contributions later — up to your filing deadline, including extensions.
For example, John, an independent contractor earning $200,000, establishes a Solo 401(k) in late December. By April 15, he contributes $22,500 as the employee portion and another $40,000 as the employer. Those contributions reduce his taxable income to $137,500 — saving him roughly $15,000 in federal taxes while funding his retirement.
It’s the rare move that lowers taxes, builds wealth, and keeps you in control of your money.
The Power of Pre-Planning Cash Flow
Smart tax strategy isn’t about panic purchases. It’s about aligning cash flow with purpose.
If you know you’ll have a strong Q4, consider moving some of those dollars into areas that either create deductions or future revenue. Maybe you sponsor a client appreciation event before year-end, lock in charitable donations, or pay employee bonuses early.
Each decision should be intentional, not impulsive. The key is to plan these moves before December 31, when you still have control.
The IRS rewards timing and documentation. Keep receipts, note the purpose of each expense, and make sure every dollar has a business reason behind it. That’s what turns “spending” into “strategy.”
The Hidden Value of Reviewing Your Entity Structure
While you’re fine-tuning year-end numbers, take a closer look at your entity structure. Many small business owners start as an LLC and never think about whether it’s still the right fit.
An LLC is flexible but may not offer the same tax advantages as an S-Corporation, especially once profits exceed what’s considered a reasonable salary for the owner. By electing S-Corp status, you can split income between salary (subject to payroll taxes) and distributions (which typically are not).
If you’d like to learn more about this – consider my book: S-Corp Mastery (it will teach you everything you need to know about this)
This single election, made with a bit of planning, often pays for professional advice many times over.
The Mindset of the Tax-Savvy Business Owner
The difference between reactive taxpayers and proactive strategists comes down to mindset.
Reactive taxpayers see taxes as a once-a-year event. Proactive business owners treat taxes as a year-round game of positioning… where every quarter is an opportunity to earn, invest, and legally redirect wealth.
Instead of asking, “How much will I owe?” they ask, “Where should my next dollar go to do the most good?”
That’s why the smartest clients I work with don’t call me in April. They call me in October, November, or December — when there’s still time to make meaningful changes before the year closes.
A Quick Reality Check
Maybe you’re reading this in mid-December and thinking,
“Well, that’s great, but I’m out of time.”
Not necessarily. You might not be able to restructure everything, but you can still make smart, fast moves that count before the ball drops.
Fund a retirement account. Purchase or place equipment in service. Make charitable contributions. Adjust your owner’s draw or salary. Prepay legitimate expenses that lock in deductions this year.
If you’re not sure where to start, that’s exactly when professional guidance makes all the difference. A skilled tax strategist can map out a few quick scenarios and show you (in real numbers) how each move affects your bottom line. Most business owners find that once they see the options side by side, the guesswork disappears and the path forward becomes crystal clear.he dark.
Even if the clock’s running down, there’s still time to play smart.
Pulling It All Together
The end of the year isn’t just about closing your books. It’s about opening opportunities.
Tax strategy isn’t magic. It’s math, law, and timing… used intelligently. When you move with intention before December 31, you keep more of what you earn, strengthen your business, and set yourself up for the kind of year where taxes stop being a burden and start becoming a tool.
So before you toast to the new year, ask yourself:
“Have I done everything I can to finish this one strong?”
Because once the ball drops, your 2025 tax story is already written.
Welcome to the New Age of Accounting. Let’s begin.
P.S. If you found this article helpful, you’ll love my new book S-Corp Mastery: How Smart Business Owners Maximize Tax Savings & Build a Lasting Legacy. It’s now live and available in a sleek, easy-to-read PDF version. Grab your copy here.
Chris is the Managing Partner at Weston Tax Associates, a best-selling author, and a renowned tax strategist. With over 20 years of expertise in tax and corporate finance, he simplifies complex tax concepts into actionable strategies that drive business growth. Originally from Sweden, he now lives in Florida with his wife and two sons.
