October 30, 2026 | Business Tax Planning
The end of 2026 is approaching, but there may still be opportunities to reduce your business's tax liability before the year closes.
For many business owners, tax planning begins when it's time to file. By then, however, some opportunities to make tax-saving decisions may already have passed.
The good news? There's still time to review your numbers and make informed decisions.
Whether you operate an LLC, S corporation, partnership, or sole proprietorship, here are five important tax strategies worth reviewing before December 31.
1. Review Your Business Expenses Before Year-End
Are you claiming all the business deductions you're entitled to?
Every year, businesses can overlook deductible expenses simply because transactions weren't properly recorded or categorized.
Before closing your books for 2026, review expenses such as:
Business software and subscriptions
Advertising and marketing expenses
Professional and consulting fees
Office supplies and equipment
Business-related travel and vehicle expenses
Eligible employee training and development costs
What to do now: Reconcile your accounts, review expense categories, and collect missing receipts or supporting documents.
Remember, an expense generally must be ordinary, necessary, and properly substantiated to qualify for a business deduction. Special limitations may apply to certain expenses.
2. Consider Equipment Purchases and Depreciation Opportunities
Planning to upgrade computers, equipment, or other business assets?
The timing of qualifying purchases could affect your 2026 tax deductions.
Under current federal tax rules, eligible businesses may benefit from:
Section 179 Deduction
For tax years beginning in 2026, the maximum Section 179 deduction is $2,560,000, subject to eligibility requirements, taxable-income limitations, and a phaseout that begins when qualifying property placed in service exceeds $4,090,000.
100% Bonus Depreciation
Qualifying property acquired after January 19, 2025, may be eligible for 100% first-year bonus depreciation, subject to applicable rules.
However, purchasing equipment doesn't automatically guarantee an immediate deduction. Qualifying assets generally must be placed in service during the applicable tax year, and additional limitations may apply.
What to do now: Review planned purchases with your tax advisor before committing to major expenditures. Accelerating a purchase makes sense only when it also supports your business's financial goals.
3. Review Your Retirement Plan Contributions
Retirement contributions can be an effective way to build long-term savings while potentially reducing taxable business income.
Depending on your business structure and eligibility, options may include:
SEP IRAs
Solo 401(k) plans
Traditional employer-sponsored 401(k) plans
SIMPLE IRAs
Contribution limits, employee eligibility, plan establishment requirements, and funding deadlines vary.
For example, SEP contributions for a tax year can generally be made by the business's federal income tax filing deadline, including applicable extensions.
Other plans may require certain elections, salary deferrals, or administrative actions before year-end.
What to do now: Review your current retirement plan, available contribution capacity, and relevant deadlines. If you don't have a plan, discuss which options may be appropriate for your business.
4. Check Your Estimated Taxes and Cash Flow
A profitable year is great for business, but higher profits can also mean a larger tax bill.
If your revenue or profitability increased in 2026, your estimated tax payments may no longer reflect your actual tax obligations.
For calendar-year individual taxpayers who must make quarterly estimated payments, the fourth payment for the 2026 tax year is generally due January 15, 2027.
Businesses and owners subject to different estimated-payment rules may have other deadlines.
Reviewing your estimated taxes now can help you:
Identify potential underpayments
Plan for upcoming tax obligations
Avoid unnecessary cash flow pressure
Evaluate whether additional payments or withholding adjustments are appropriate
What to do now: Compare your year-to-date taxable income, estimated payments, and projected full-year results.
Don't wait until filing season to discover that your tax liability is significantly higher than expected.
5. Review Payroll, Owner Payments, and Year-End Records
Payroll and bookkeeping issues can create unnecessary complications during tax season.
Before the end of 2026, review:
Employee wages and payroll tax records
Owner compensation and distributions
Taxable bonuses and fringe benefits
Contractor payment records
Outstanding invoices and business liabilities
Bank and credit card reconciliations
If you operate an S corporation, owner compensation should also be reviewed for compliance with reasonable compensation requirements.
Additionally, businesses should verify contractor information and prepare for applicable information-reporting obligations.
What to do now: Address discrepancies before finalizing your year-end books rather than carrying unresolved issues into the next tax season.
Don't Wait Until Tax Season to Start Planning
The biggest difference between tax preparation and tax planning is timing.
Tax preparation reports what already happened.
Tax planning helps you evaluate decisions while there's still an opportunity to influence the outcome.
Some tax-saving strategies require action before December 31, while others have deadlines extending into 2027. Knowing which rules apply to your business is essential.
With only two months remaining in 2026, now is a good time to review your financial position, identify available opportunities, and prepare for a smoother filing season.
Make Your Next Tax Move With Confidence
You work hard to grow your business. Your tax strategy should support that growth.
At Virtual CPAs, we help business owners navigate tax planning, accounting, and compliance so they can make informed financial decisions throughout the year.
Ready to review your 2026 tax strategy?
Connect with Virtual CPAs and explore the planning opportunities that may apply to your business.
Disclaimer: This content is provided for general informational purposes and does not constitute individualized tax or legal advice. Tax treatment depends on business structure, eligibility, applicable federal and state laws, and individual circumstances. Consult a qualified tax professional before implementing tax strategies.