Most business owners treat tax season like it starts in January. It doesn't. The decisions that actually reduce your 2026 tax bill — the ones that can save you hundreds or thousands of dollars — all have a hard deadline: December 31. By the time your accountant calls in February, the window is closed. There's nothing left to do but write the check.
This checklist covers what to actually do — and what to check — before the year ends. Run through it now while you still have time to act.
Deductions Most Business Owners Miss
These are the items that tend to fall through the cracks — either because they're unfamiliar, because the paperwork feels like a hassle, or simply because no one mentioned them.
Retirement Contributions
Contributing to a retirement account is one of the most powerful tax moves available to self-employed business owners. A SEP-IRA allows contributions up to 25% of net self-employment income and can be funded as late as your extended filing deadline, which gives you flexibility. A Solo 401(k) allows higher combined limits but the plan itself must be established by December 31 to make contributions for 2026 — even if you fund it later. If you don't have a retirement plan in place yet, this is worth a conversation before year-end.
Section 179 Depreciation
Normally, when you buy equipment or business assets, you depreciate them gradually over several years. Section 179 lets you skip that and deduct the full purchase price in the year you buy it — which can meaningfully reduce your 2026 taxable income. This applies to equipment, machinery, certain vehicles, and qualifying software. The requirement: the asset must be placed in service by December 31. Buying something in December and leaving it in the box doesn't qualify.
Home Office Deduction
If you use part of your home exclusively and regularly for business, you may be able to deduct a portion of your housing costs. The simplified method gives you $5 per square foot of dedicated office space up to 300 square feet. The actual expense method deducts a proportional share of rent, utilities, insurance, and repairs — more work to track, but potentially a larger deduction. The key word in both cases is 'exclusively.' A guest bedroom that doubles as an office doesn't qualify.
Vehicle Mileage
If you use your personal vehicle for business purposes, you can deduct those miles at the current IRS standard mileage rate. The deduction requires a mileage log — the IRS expects you to record the date, business purpose, destination, and miles for each trip. A phone app makes this much easier to maintain throughout the year. If you haven't been tracking, reconstruct what you can from calendars and receipts.
Qualified Business Income (QBI) Deduction
This is one of the most significant deductions available to small business owners — and one of the most frequently missed. If your business is structured as a sole proprietorship, S corporation, partnership, or LLC, you may be able to deduct up to 20% of your qualified business income before the number even hits your personal return. Most small business owners qualify, but the rules have income thresholds and phase-outs. If you're not sure whether you're claiming this, talk to your accountant.
Health Insurance Premiums
Self-employed business owners can deduct 100% of health insurance premiums paid for themselves, their spouse, and dependents. This is an above-the-line deduction, meaning it reduces your adjusted gross income regardless of whether you itemize. This applies to medical, dental, and qualifying long-term care insurance. The one limitation: you can't take the deduction in any month you were eligible for employer-sponsored coverage through a spouse's plan.
Year-End Moves with December 31 Deadlines
Bonus Depreciation
Bonus depreciation has gone through several changes in recent years and the rules for 2026 may differ from what you remember. The percentage you can deduct in year one has phased down over time. This is one to verify with your accountant rather than assume — but if you're planning a major purchase, the timing matters.
Income Deferral
If your business operates on a cash basis, you have the option to delay sending invoices for large receivables until January. Income you receive in January is taxable in 2027, not 2026. This is entirely legal and is a legitimate tax planning strategy. Whether it makes sense depends on your expected income in both years, your current bracket, and cash flow considerations. Worth a conversation before you send that last invoice of the year.
Accelerating Deductible Expenses
The flip side of deferring income is pulling expenses into 2026 that you'd otherwise pay in early 2027. For cash-basis taxpayers, expenses are deductible in the year paid. Consider prepaying January rent before December 31, purchasing supplies or software you'll need anyway, paying outstanding invoices to vendors, or renewing annual service contracts early. This is a straightforward way to add legitimate deductions to 2026 without changing what you're spending — just shifting the timing.
Q4 Estimated Tax Payment
The fourth-quarter estimated tax payment is due January 15, 2027. Before that date, verify your payment amount is sufficient to avoid an underpayment penalty. If your income was higher than expected in 2026, you may need to true up before year-end or by January 15 to stay ahead of any IRS interest.
Retirement Plan Establishment
A Solo 401(k) plan must be established by December 31 to make 2026 contributions. If you've been thinking about opening one, the deadline is the plan setup date, not the contribution date. Don't let this one slip.
Bookkeeping Cleanup Checklist
None of the above matters if your books are a mess come April. Clean books are what let your accountant work efficiently — and efficiently usually means a smaller invoice and fewer surprises. Use the final months of the year to get current.
- Reconcile all bank and credit card accounts through October (and November when it closes)
- Review expense categorization — track down any items sitting in 'miscellaneous' or 'uncategorized'
- Confirm all payroll has been properly recorded and remitted
- Collect W-9 forms from any contractors you've paid $600 or more this year — 1099s are due January 31
- Review accounts receivable — write off genuine bad debts before year-end if the amount is uncollectable
- Review assets purchased this year and flag them for depreciation decisions with your accountant
Ready to Walk Through Your Specific Situation?
Every item on this list is general guidance — the right answer for your business depends on your structure, your income, your industry, and what's changed this year. A deduction that's straightforward for one business owner can have complications for another. That's not a reason to ignore these — it's a reason to talk through them with someone who knows your numbers.
