7 Year-End Tax Strategies for Small Business Owners (2026)
Want to pay less in taxes? There may still be time to do something about it!
Your business had a great year. Sales are up, profits are looking good, and you're feeling pretty happy.
Then tax season arrives, and suddenly you're looking at a much bigger tax bill than expected.
Sound familiar?
Here's the good news. There may still be ways to lower your 2026 taxes. But some of these opportunities disappear after December 31.
Let's look at seven things worth checking before the year ends.
1. Don't Get Surprised by Your Tax Bill
Nobody likes finding out they owe thousands more than expected.
If your business made more money this year, your taxes may be higher too.
What to do: Take a look at your profits, estimate what you'll owe, and check how much you've already paid.
A little planning now can help you avoid a big surprise later.
2. Put More Money Into Retirement
Would you rather pay more in taxes or put some of that money toward your retirement?
That's why retirement contributions can be such a great tax-saving tool.
Depending on your business, a Solo 401(k), SEP IRA, or another retirement plan may help lower your taxable income.
And you're saving for your future at the same time!
Just remember that different plans have different deadlines.
3. Need Equipment? Now Might Be the Time
Thinking about buying a new computer, tools, or equipment for your business?
Many qualifying purchases can be fully deducted for federal taxes in 2026.
But here's my advice: Don't spend $20,000 just to save $5,000 in taxes!
Buy what your business actually needs.
And make sure qualifying equipment is placed into service before year-end if you want the deduction for 2026.
4. Check Those Unpaid Business Bills
Have a few business bills sitting around?
If your business uses the cash method of accounting, paying certain expenses before December 31 could help lower this year's taxes.
Maybe it's a contractor invoice, professional fees, or supplies.
But don't rush to pay everything. Some expenses have special rules, and sometimes waiting makes more sense.
5. S Corporation Owners: Check Your Salary
If you own an S corporation, this one's important.
The IRS generally requires you to pay yourself a reasonable salary.
But you don't necessarily need to pay yourself every dollar of business profit as wages.
Getting this right can help you manage payroll taxes and avoid IRS problems.
And don't forget to make sure your health insurance is reported correctly on your W-2!
6. Don't Miss the 20% Business Income Deduction
Here's a tax break worth knowing about.
Many small business owners may qualify for a deduction of up to 20% of their qualified business income.
It's called the QBI deduction.
Sounds pretty good, right?
There are income limits and other rules, so not everyone gets the full deduction.
But it's definitely something worth checking.
7. Don't Forget About State Taxes
Federal taxes get most of the attention, but state taxes matter too!
For example, eligible California S corporations and partnerships may benefit from the Pass-Through Entity Elective Tax.
It sounds complicated, but the idea is simple: It may help lower your federal tax bill.
There are special rules and deadlines, so you'll want to review this before making any payments.
The Bottom Line: Don't Wait Until April!
Here's the thing.
You don't need to use all seven strategies. Some may not even apply to your business.
But wouldn't you rather find out now if there's a way to save money instead of finding out next April that you missed your chance?
That's what good tax planning is all about.
Want to see if you're paying more in taxes than you need to?
At Advantage Accounting Group, we help small business owners find opportunities to save on taxes and avoid surprises.
Let's see if there's an opportunity to keep more of your hard-earned money!
Tax savings depend on your situation. This article provides general information, not personalized tax advice.
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