2026 Year-End Tax Planning for Small Business Owners: 10 Moves to Make Before December 31
If you own a small business in Ankeny, Des Moines, Carroll, or anywhere else in Iowa, September is a good time to stop and look at your 2026 tax situation.
You still have time to make decisions that could affect your tax bill—but that window gets smaller every week.
Too many business owners wait until their tax return is being prepared to ask, “What can I do to lower my taxes?”
By then, most of the major decisions have already been made.
Tax preparation looks backward. Tax planning looks forward.
With 2026 moving into its final quarter, now is the time to review your business income, expenses, estimated taxes, retirement contributions, equipment purchases, entity structure, and other potential tax strategies.
Here are 10 year-end tax planning moves small business owners should consider before December 31.
1. Get Your Books Caught Up
Before you can make good tax decisions, you need accurate financial information.
If your bookkeeping is several months behind, you may not know:
How profitable your business actually is
How much you've paid yourself
Whether you're on pace to exceed your estimated income
How much you've already paid in estimated taxes
Whether you're spending more or less than expected
Whether you can afford a major business purchase
How much taxable income you may have for the year
This is one reason monthly bookkeeping is more valuable than simply having someone organize your books before tax season.
Your books should help you make decisions throughout the year—not just help your CPA prepare a tax return.
If your financial statements aren't current, getting your bookkeeping cleaned up should be one of your first priorities this fall.
2. Review Your Year-to-Date Profit
Once your books are current, look at your year-to-date profit.
Don't just look at your bank account.
A business can have $100,000 sitting in the bank and still have a very different taxable income number after accounting for revenue, deductible expenses, depreciation, payroll, owner compensation, and other tax items.
Compare your actual year-to-date results with what you expected at the beginning of the year.
Ask:
Is my business making more or less money than I expected?
If your income has increased substantially, your tax liability may also be higher than originally projected.
That gives you an opportunity to make adjustments before December 31 rather than being surprised when your tax return is prepared.
3. Revisit Your Estimated Tax Payments
The federal tax system generally requires taxes to be paid throughout the year rather than waiting until you file your return.
For many business owners, this happens through quarterly estimated tax payments.
The IRS lists September 15, 2026, as the third-quarter estimated tax payment deadline for individuals.
But don't simply assume that the amount you paid last year is appropriate for this year.
If your business income has changed significantly, your estimated payments may need to be reviewed.
For example, a business owner whose income has increased significantly may find that last year's estimated payments are no longer sufficient.
On the other hand, someone whose business income has fallen may be overpaying.
Your CPA can help project your current-year tax liability and determine whether adjustments make sense.
4. Review Your Business Entity and S Corporation Situation
Your business structure can have significant tax consequences.
Many small businesses operate as sole proprietorships or single-member LLCs, while others elect to be taxed as S corporations.
But choosing an S corporation isn't automatically the right answer for every business.
The potential benefits need to be weighed against additional payroll requirements, administrative costs, reasonable compensation requirements, tax filings, and other considerations.
If you've had a significant increase in business profit, this is a good time to discuss whether your current tax structure still makes sense.
Don't form an S corporation simply because someone told you it will “save taxes.”
Run the numbers first.
5. Look at Major Equipment and Business Purchases
If your business needs equipment, computers, machinery, vehicles, furniture, or other business assets, the timing of those purchases may affect your tax situation.
Depending on the asset and your specific circumstances, tax rules may allow some or all of the cost to be deducted or depreciated.
However, buying something solely to get a tax deduction is usually a bad financial decision.
Spending $10,000 simply to save a portion of that amount in taxes doesn't make you $10,000 richer.
The better question is:
“Does my business actually need this purchase, and if so, does purchasing it this year make sense from both a business and tax perspective?”
Tax planning should support good business decisions—not encourage unnecessary spending.
6. Review Retirement Contributions
Retirement planning can also be part of a business owner's overall tax strategy.
Depending on your business structure and circumstances, you may have options such as:
Traditional IRAs
SEP IRAs
SIMPLE IRAs
401(k) plans
Other employer-sponsored retirement arrangements
The contribution limits, deadlines, eligibility requirements, and tax treatment vary depending on the type of plan.
If you are self-employed or own a small business and haven't reviewed your retirement strategy this year, don't wait until tax season.
Some retirement planning decisions require more advance planning than simply writing a check in December.
7. Review Your Business Expenses
Take a close look at your recurring expenses before the year ends.
Look for legitimate business expenses that you may have overlooked or failed to properly categorize.
Common categories may include:
Advertising and marketing
Professional services
Business insurance
Software subscriptions
Office expenses
Continuing education
Business travel
Vehicle expenses
Contractor payments
Rent
Business interest
Other ordinary and necessary business expenses
This does not mean you should manufacture expenses or spend money simply to reduce taxable income.
It means you should make sure legitimate business expenses are being properly tracked and documented.
Good bookkeeping makes this much easier.
8. Check Your Vehicle and Mileage Records
Vehicle expenses are frequently overlooked—or poorly documented.
If you use a personal vehicle for business purposes, you may be able to deduct qualifying business mileage or actual vehicle expenses, depending on your situation.
For 2026, the IRS standard mileage rate for business use of a car, van, pickup, or panel truck is 72.5 cents per mile.
But having a business-related reason for driving isn't enough by itself.
You should maintain appropriate records showing the date, destination, business purpose, and mileage of qualifying trips.
Don't wait until you're sitting with your tax preparer in March or April trying to reconstruct an entire year's worth of driving.
9. Make Sure Your Tax Strategy Matches Your Actual Business
Your business isn't the same as everyone else's.
A real estate agent, contractor, therapist, farmer, consultant, restaurant owner, and online business owner can have very different tax considerations.
Your tax strategy should reflect:
Your business structure
Your income level
Your industry
Your personal income
Your expected growth
Your retirement goals
Your cash flow
Your major upcoming purchases
Your estimated tax payments
Your long-term plans
This is why copying a tax strategy from another business owner can be dangerous.
A strategy that works extremely well for one business may provide little benefit—or create unnecessary complications—for another.
10. Schedule Your Year-End Tax Planning Meeting Before December
This may be the most important item on the list.
Don't wait until your tax return is due to find out what you could have done differently.
A proactive tax planning meeting can help you estimate your current-year tax liability and identify opportunities before the year closes.
At Knobbe & Associates, CPA, we believe your CPA should be more than the person you send documents to once a year.
Your tax return tells you what happened.
Tax planning helps you decide what to do next.
For many business owners, September through November is an ideal time to review the numbers, identify potential strategies, and make informed decisions before December 31.
What Small Business Owners Should Do Now
You don't need to implement every possible tax strategy.
You need to identify the strategies that actually make sense for your business.
Start with these five steps:
Get your bookkeeping current.
Review your year-to-date profit.
Project your full-year income.
Review your estimated tax payments.
Meet with your CPA before year-end.
The earlier you start, the more options you typically have.
Waiting until your tax return is being prepared can leave you with far fewer opportunities to change the outcome.
Need Help With 2026 Tax Planning?
If you're a small business owner in Ankeny, Des Moines, Carroll, or elsewhere in Iowa, Knobbe & Associates, CPA can help you look beyond simply preparing your tax return.
Our Small Business Tax Planning & Strategy service is designed to help business owners understand where they stand, identify potential tax strategies, and make better decisions before the year ends.
Don't wait until April to find out what you could have done in December.
Contact Knobbe & Associates, CPA to schedule a tax planning consultation.
