Every December, I watch business owners do two things at the exact same time. First, they celebrate the season with family, gifts, maybe a well-earned vacation. Second, they accidentally hand the IRS a bigger Christmas bonus than they give their own employees. They rarely do it on purpose. It usually happens because they wait until January to start “thinking” about tax planning. By then, the game is over. The IRS has already taken its slice, and you’re left wondering why you worked so hard all year only to pay more than you needed to.
I learned a long time ago that tax planning is a December sport, not a February fantasy. Once the ball drops on New Year’s Eve, most of the powerful moves disappear. That’s why I always tell my clients that waiting until tax season is the same as showing up to the airport after your plane has already taken off. You can wave at it, you can run toward it, you can yell at it, but the plane is gone. And so is your chance to legally keep more of your money.
Today, I want to show you how business owners keep thousands of dollars simply by making smart moves before December 31st—and how inaction can quietly drain your cash flow without you noticing. My goal is simple. I want you to stop funding the IRS’s holiday shopping and redirect that money back into your own business, your family, or yes—even that Christmas bonus you’ve been promising yourself.
Let’s make sure you keep it.
Why December 31st Is the Real Tax Deadline
Most people think April 15th is “Tax Day,” but for strategy, the real deadline is December 31st. Anything you try to fix after that date is more like damage control than planning. The IRS is very clear about when deductions, payroll changes, retirement contributions, and entity decisions take effect. Many of the best strategies require action in the same tax year, not after it closes.
I’ve had countless conversations with business owners who call me in March and say, “Chris, can we still fix last year?”
And while I can often help, what I can’t do is bend the tax code backward in time. Think of December 31st as a locked door. Before midnight, you can walk through. After midnight, you’re on the wrong side of it. That’s why the smartest business owners act before the clock strikes twelve.
Let me show you what that looks like in real life.
A Real Example of How Fast Action Saves Money
A few years ago, I met with a business owner who ran a successful contracting company. He called me on December 18th, frustrated because his projected tax bill was higher than he expected. He asked me what could be done. What he really meant was: “How fast can we fix this before the IRS helps themselves to my Christmas?”
Because he called me in time, we reviewed his books and saw he needed several pieces of equipment in January anyway. I suggested he place them in service before December 31st, which allowed him to use bonus depreciation under IRC §168(k) to write off a large portion immediately. We also adjusted his S-Corp payroll to match IRS reasonable compensation standards and shifted some of his year-end payments in a way that matched his cash flow needs.
In less than two weeks, he reduced his tax bill by over thirty-five thousand dollars. The timing was everything. If he had waited until January, we would have had far fewer tools available, and his tax bill would’ve looked very different.
That’s the power of acting before the deadline. The tax code rewards the proactive, not the reactive.
Five Smart Moves You Can Still Make Before December 31st
Every business is different, but there are five strategies I use with clients year after year because they reliably lower taxes when implemented before the calendar flips. Remember, these are illustrations, not advice tailored to your situation. But they show you the kinds of moves that make a real difference.
Maximize Year-End Equipment and Asset Purchases
If you know you’ll need equipment next year—a computer upgrade, machinery, tools, software, even furniture—placing them in service before year-end can create an immediate deduction. Section 179 and bonus depreciation are two of the strongest incentives Congress has ever written into the tax code for small and medium-sized businesses. They allow you to write off most or all of the purchase in the first year instead of depreciating it slowly.
This isn’t about “spending money to save money.” That’s a trap. This is about timing purchases you already intended to make and letting the tax code work in your favor. If you plan to buy anyway, buying before December 31st could save you thousands.
Review S-Corp Payroll and Reasonable Compensation
If you run an S-Corp, your salary must be “reasonable,” according to IRS standards and court cases like Watson v. United States, 668 F.3d 1008 (8th Cir. 2012). Underpay yourself, and you risk an IRS audit and additional payroll taxes. Overpay yourself, and you might be sending extra money to the IRS for no benefit.
The end of the year is the perfect time to review your compensation and adjust it to align with industry standards. This lets you optimize the balance between wages and distributions, potentially lowering your tax liability while staying compliant.
This is one of the most misunderstood parts of S-Corp planning, but when done right, it often leads to immediate tax savings.
Pre-Fund Your Retirement the Smart Way
Many business owners forget that retirement contributions can be one of the biggest tax deductions available. Plans like SEP IRAs, SIMPLE IRAs, and Solo 401(k)s all come with powerful tax advantages—but some require action before year-end to qualify.
If you’re a business owner with variable income, year-end planning lets you estimate your final numbers and choose the right plan. I’ve helped clients who previously contributed nothing to retirement walk away with over fifty thousand dollars in deductions simply because they used the right structure.
Think of retirement as a tax strategy disguised as future planning. It reduces your tax bill today while building wealth for tomorrow.
Clean Up Your Books and Capture Missed Deductions
One of the easiest year-end wins is simply cleaning up bookkeeping. Transactions from earlier in the year get miscategorized, missed, or buried in a bank feed. When I dig into a client’s books in December, I often uncover deductions they didn’t even know they had.
This cleanup lets you capture legitimate expenses before the year ends—home office allocations, mileage logs, subscriptions, contractor payments, and more. Clean books equal clean deductions. And clean deductions equal real tax savings.
Never underestimate the power of tightening your books before December 31st. It’s often the difference between a moderate tax bill and a surprisingly low one.
Accelerate Expenses or Defer Income (When It Makes Sense)
Sometimes the simplest strategy is to push income into January or pull expenses into December. This is perfectly legal when done correctly. The IRS allows it because it matches how many businesses actually operate, especially those on the cash basis method.
For example, if you’re expecting a large invoice to be paid, you might delay sending it until early January if cash flow allows. On the flip side, if you need to pay for subscriptions, inventory, or professional fees, doing so before year-end may give you a deduction now instead of later.
Timing is everything in tax planning. Small shifts can create meaningful changes.
The Cost of Doing Nothing
Whenever I talk about tax planning, someone always asks, “But what if I don’t do anything?” The answer is simple. Doing nothing is often the most expensive choice.
Imagine a business owner earning four hundred thousand dollars a year, who waits until March to start planning. They discover too late that they missed retirement deductions, equipment write-offs, payroll adjustments, and proper structuring opportunities. That mistake could easily cost them twenty, thirty, even fifty thousand dollars depending on their business.
That money doesn’t vanish. It goes directly to the IRS. And once sent, it’s gone forever.
I’ve never met a business owner who regrets planning early. But I’ve met hundreds who regret waiting.
Why Planning Early Creates a Stronger Business
The goal of year-end tax planning isn’t only to save money today. It’s also about building systems that support your long-term growth. The business owners who plan before December 31st understand that tax strategy isn’t a luxury. It’s a tool. A powerful one.
Early planning helps you understand your cash flow, strengthens your decision-making, and often reveals opportunities you wouldn’t see otherwise. It helps you approach the next year with clarity instead of confusion. Most importantly, it builds confidence. You feel in control of your financial future instead of reacting to tax bills when it’s already too late.
That sense of control is important, especially for entrepreneurs juggling employees, clients, deadlines, and the constant demands of running a business. When your tax strategy is dialed in, your business becomes easier to run. And your stress level drops dramatically.
Planning With Purpose
I’ve spent years helping business owners keep more of what they earn, and one pattern shows up every single time. The business owners who act before December 31st always come out ahead. Not sometimes. Always. Because they give themselves options. They give themselves room to maneuver. They don’t wait until the tax code has locked the door behind them.
My job as a tax strategist is to help you see around corners. To understand what the IRS sees. To use the tools the tax code gives you—not after the fact, but when they’re still within reach.
Your job is simply to act before the clock runs out.
There’s still time this year. Whether you run an LLC, an S-Corp, or you’re somewhere in between, the right strategy can make a difference. A big one.
Take control now so the IRS doesn’t keep your Christmas bonus.
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.
