Last-Minute Tax Moves Small Business Owners Should Make Before Filing Season

Tax season is approaching, and if you’re like most business owners, you’re probably thinking, “I should have done more tax planning in December.”

You’re right. You should have. However, beating yourself up about it doesn’t help, and there are still moves you can make right now that reduce your 2025 tax liability before you file your return.

Most business owners think tax planning ends on December 31st. That’s not entirely true. While many tax strategies are deadline-dependent, others can be implemented or optimized during the first few months of the year before you file. More importantly, understanding what you should have done in 2025 helps you plan better for 2026.

Let me walk you through the tax moves you can still make, the ones you missed (so you don’t miss them again), and how to approach tax season strategically rather than reactively.

What You Can Still Do Right Now

Even though 2025 is closed, several tax strategies remain available until you actually file your return or until specific deadlines in early 2026.

Maximize Retirement Contributions

If you have a SEP IRA, you can make contributions up until your tax filing deadline, including extensions. For 2025, that means you have until April 15, 2026 (or October 15, 2026 if you file an extension) to contribute and claim the deduction on your 2025 return.

According to the IRS, SEP IRA contribution limits for 2025 are the lesser of 25% of compensation or $69,000. For self-employed individuals, the calculation is slightly more complex because it’s based on net self-employment income after deducting half of your self-employment tax and the SEP contribution itself.

A $50,000 SEP contribution for someone in the 35% tax bracket saves $17,500 in federal taxes. That’s real money, and you still have time to fund it.

Solo 401(k) plans work similarly. Employee deferrals had to be made by December 31st, but employer profit-sharing contributions can be made up until your filing deadline, including extensions. For 2025, total contribution limits are $69,000 ($76,500 if you’re 50 or older with catch-up contributions).

Fund an HSA for 2025

If you have a qualifying high-deductible health plan, you can make Health Savings Account contributions for 2025 until April 15, 2026. For 2025, HSA contribution limits are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution if you’re 55 or older.

HSA contributions are triple tax-advantaged: they reduce your taxable income when contributed, they grow tax-free, and they’re tax-free when used for qualified medical expenses. According to the U.S. Government Accountability Office, HSAs are one of the most tax-efficient savings vehicles available.

Even if you don’t have immediate medical expenses, funding an HSA makes sense as a long-term healthcare savings strategy that also delivers current-year tax benefits.

Make Required Estimated Payment for Q4 2025

If you owe estimated taxes for Q4 2025 and missed the January 15th deadline, paying now minimizes underpayment penalties. The IRS assesses penalties based on how long the payment is late, so paying in late January is better than paying when you file in April.

If you significantly underpaid the estimates for 2025, you might consider filing your return early and paying the full amount due to stop penalty accrual. The underpayment penalty is calculated using IRS interest rates, which, according to IRS guidance, can add hundreds or thousands to your tax bill depending on the shortfall.

Organize and Maximize Deductions

You can’t change what you spent in 2025, but you can ensure you’re claiming every legitimate deduction. Many business owners miss deductions simply because they didn’t track expenses properly or didn’t realize something was deductible.

Common missed deductions include home office expenses if you qualify, vehicle expenses for business use, business meals (50% deductible under current rules), professional development and education related to your business, business insurance premiums, and bank fees and merchant processing fees.

Go through your 2025 bank and credit card statements systematically. Look for business expenses you might have paid personally and forgot to reimburse yourself for. Review recurring subscriptions and software fees to ensure they’re all captured.

The IRS requires adequate documentation for deductions, but “adequate” doesn’t always mean receipts for everything. For expenses under $75, bank or credit card statements showing the amount, date, and payee may be sufficient. For larger expenses, you need receipts showing the amount, date, place, and business purpose.

Consider Filing Early If You’re Due a Refund

If your 2025 tax situation shows a refund, there’s no benefit to waiting. File as soon as you have all your documentation organized. You’ll get your refund faster, and you can make strategic decisions about how to use it.

Some business owners use refunds to fund retirement accounts, pay down debt, or invest in growth initiatives. The sooner you file, the sooner you have access to that capital.

What You Missed for 2025 (But Can Plan for 2026)

Understanding what you should have done helps you avoid the same regrets next January. These strategies required action before December 31st, 2025, but you can implement them for 2026.

Equipment and Asset Purchases

Section 179 expensing and bonus depreciation allow you to deduct the full cost of qualifying equipment purchases in the year placed in service, rather than depreciating over several years. For 2025, Section 179 limits were $1,220,000 in deductions on up to $3,050,000 of qualifying property purchases.

However, to qualify, equipment must be purchased AND placed in service by December 31st. Buying a $50,000 piece of equipment on December 29th counts. Buying it on January 2nd doesn’t help your 2025 taxes at all.

According to the Small Business Administration, strategic equipment purchases timed for year-end can significantly reduce tax liability while upgrading business capabilities.

Retirement Plan Establishment

While you can fund SEP IRAs and Solo 401(k)s after year-end, you can only establish NEW retirement plans by December 31st (with some exceptions). If you didn’t have a retirement plan in place by year-end, you couldn’t create one in January and take 2025 deductions.

For 2026, consider establishing your retirement plan early in the year so you have the full year to plan contributions strategically.

Prepaying Expenses

Cash-basis businesses can deduct expenses in the year paid, even if the expense relates to the following year. That means December payments for January services, insurance premiums, rent, or other expenses could have reduced 2025 taxable income.

There are limits. The IRS’s 12-month rule under Revenue Procedure 2004-34 says you can only prepay expenses that don’t extend beyond 12 months or beyond the end of the tax year following the payment year.

Income Deferral

If your business had a strong December, you might have been able to defer some income into January by delaying billing or delaying payment receipt. This only works for cash-basis businesses, and you can’t artificially defer income that was constructively received.

However, legitimate timing of billing and collection can shift income between years, which is valuable when you’re trying to manage tax brackets.

Understanding Your Tax Situation Before Filing

Before you file your 2025 return, take time to understand what the numbers mean for your business.

Analyze Your Effective Tax Rate

Your effective tax rate is the total tax divided by the total income. It tells you what percentage of your income actually went to taxes. According to the Tax Foundation, understanding this number helps you evaluate whether your tax planning strategies are working.

If your effective rate is higher than you expected, dig into why. Are you missing deductions? Did you have income timing issues? Is your business structure optimal?

Review Estimated Tax Strategy

If you significantly overpaid or underpaid estimated taxes for 2025, your estimation methodology needs adjustment. The IRS offers several safe harbor methods to avoid underpayment penalties, including paying 100% of prior year tax (110% if your income exceeds certain thresholds), paying 90% of current year tax, or using the annualized income method if your income is uneven.

For 2026, pick the method that works best for your business cash flow and income pattern, then stick to it consistently.

Evaluate Business Structure

Your entity choice affects how you’re taxed. Sole proprietorships, partnerships, S corporations, and C corporations all have different tax treatments and planning opportunities.

If your business has grown significantly, this might be the year to consider restructuring. An S corporation election can reduce self-employment taxes for profitable businesses. Converting from S to C corporation might make sense in certain circumstances with the current 21% corporate tax rate.

Don’t make entity changes lightly or without professional advice. Do evaluate whether your current structure still serves you well.

Building Better Tax Planning for 2026

The best time to plant a tree was 20 years ago. The second-best time is now. The same logic applies to tax planning.

Implement Quarterly Tax Reviews

Don’t wait until December to think about taxes. Review your tax situation quarterly with your accounting firm. Assess year-to-date income and project year-end, estimate your tax liability, evaluate whether estimated payments need adjustment, and identify planning opportunities while you still have time to act.

According to the American Institute of CPAs, businesses that conduct quarterly tax reviews typically achieve better tax outcomes than those that only think about taxes annually.

Create a Tax Planning Calendar

Different tax strategies have different deadlines. Create a calendar that reminds you when to take action. Some key dates include mid-year review of retirement plan contributions and estimated taxes, September review of year-to-date position and Q4 planning opportunities, early December meeting with accounting team to finalize year-end moves, and December execution of approved strategies before year-end.

Build tax planning into your regular business rhythm rather than treating it as an annual emergency.

Track Everything Throughout the Year

Don’t rely on your memory or a shoebox full of receipts. Use accounting software or apps that capture expenses as they occur. Many business owners use tools that photograph receipts, categorize expenses automatically, and sync with accounting software.

The IRS generally requires contemporaneous documentation. That means records created at or near the time of the expense, not reconstructed months later.

Work With a Tax Professional

The tax code is complex and constantly changing. Trying to navigate it alone means you’re probably missing opportunities and possibly taking risks you don’t understand.

A qualified tax professional costs money, but they should save you more than they cost through better planning, legitimate deductions you’d otherwise miss, and avoiding costly mistakes. The National Society of Accountants reports that businesses working with tax professionals typically pay less in taxes and penalties than those that don’t.

The Bottom Line

You can’t change 2025, but you can still make moves right now that reduce your tax liability before filing. Max out retirement contributions, fund your HSA, ensure you have captured all legitimate deductions, and pay estimated taxes to minimize penalties.

More importantly, use your 2025 tax situation as a learning opportunity. What should you have done differently? What planning opportunities did you miss? What will you do differently in 2026?

Tax planning isn’t a once-a-year activity. It’s an ongoing discipline that requires attention throughout the year, strategic decision-making, and professional guidance.

Start 2026 with better habits, systems, and support. Your future self will thank you next January when you’re not scrambling to find last-minute strategies.

Ready to stop reacting to tax season and start planning strategically? Let’s talk about building a tax plan that works year-round.