Year-End Tax Moves for Business Owners: A December Checklist

1. Max your Solo 401(k) or other retirement plan

Self-employed retirement plan contributions are deductible against business income. For 2025, Solo 401(k) limit is $70,000 ($77,500 if 50+). Most plans need to be established by Dec 31 (though SEP IRAs can be set up later).

2. Consider a Cash Balance plan for big shelter

High-income owners (45+, $250K+ profit) can stack a Cash Balance plan on top of a 401(k) to shelter $150K-$280K+/year tax-deferred. Plan setup takes 30-60 days — start in November at the latest.

3. Defer income or accelerate deductions (or vice versa)

Standard year-end tax timing: defer income into next year, accelerate deductions into this year — IF your income is similar or higher than next year. Reverse if income will be higher next year.

• ·Send invoices late December so payment arrives in January
• ·Prepay deductible expenses (subscriptions, insurance, training)
• ·Buy equipment or vehicles you'll use anyway and claim Section 179
• ·If S-Corp, time year-end bonuses and distributions strategically

4. Run the Augusta Rule (Section 280A)

Rent your home to your business up to 14 days/year tax-free. Hold legitimate business events (planning sessions, retreats, board meetings) and charge fair-market daily rate. Document with agendas, attendee lists, and rate research.

5. Pay your kids for real work

Up to ~$14,600 per child (2025 standard deduction) is fully deductible to the business and fully tax-free to the child. Real work, real hours, real wage rates. Open a Roth IRA in their name with the wages.

6. Tax-loss harvest taxable investments

If you have capital losses in your taxable brokerage, realize them before Dec 31 to offset gains. Up to $3,000 of losses can offset ordinary income. Watch the wash-sale rule — don't buy substantially identical securities within 30 days.

7. Roth conversion (if income is lower this year)

Retirees and pre-retirees in low-income years should consider Roth conversions before year-end. Each conversion creates taxable income, so model with your CPA before pulling the trigger.

8. Charitable giving

Donate appreciated stock instead of cash — avoid the capital gains and get a deduction for fair market value. For larger gifts, consider a Donor Advised Fund (DAF) to bunch multiple years of giving into one tax year.

9. HSA contribution

If you have HDHP coverage, max your HSA: $4,300 single / $8,550 family (2025). Deductible going in, tax-free growth, tax-free for medical. Best retirement account in the code if you can hold it long-term.

10. Review entity structure for next year

If your S-Corp salary isn't documented well, year-end is the time to fix it. If you're still a sole prop earning $80K+, file Form 2553 to elect S-Corp status for next year. Deadline: March 15.

The Takeaway

Year-end tax planning is when the big savings happen. Most of these moves need to be DONE by Dec 31, not just planned. Block 90 minutes in November to walk through this checklist with your CPA + tax strategist. The 10 moves above typically save $15K-$50K+ for most profitable business owners.

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Bring last year's return and a current P&L. We'll walk through the checklist with your specific numbers and identify the top 3 highest-leverage moves.

Educational content only. Not financial, tax, or legal advice. Always consult a licensed professional before acting on the information in this post.