In Part II of our year-end blog series, we are exploring a few planning items that small business owners should be aware of before the year is over with a short, useful, financial checklist.
2025 brought a number of changes to the tax code that provide some opportunity to small businesses and also require careful planning in the years ahead.
Our next blog post will give information for those in, or approaching, retirement, and you can find the previous post specific to high-income households below, in the first installment of this series, “Making a List.”
Let’s get started!
Year End Financial Review and Projections
Many businesses wait until the year is over to run financial projections and clean up their records. However, while the final accounting has to wait until the year closes, putting together a solid projection for the year-end Balance Sheet and P&L will provide you with information needed to make wise year-end decisions.
Deductions and Credits
The One Big Beautiful Bill Act (OBBA) brough back 100% bonus depreciation (Section 179) for businesses.
You should evaluate what fixed assets or equipment is eligible for accelerated depreciation and determine whether it is a viable planning strategy for 2025. In general, the higher you project your income to be, the more relevant this election is to you.
There were also changes made to Research & Development Tax Credits, which are complex and should be reviewed with your tax professional.
Charitable Giving
Year-End giving can be a significant tax planning strategy, especially in higher tax years.
Using a Donor Advised Fund (DAF) for larger gifts can provide flexibility both in the short term and the long term from a giving perspective. Due to some changes in the OBBBA, charitable giving will also be slightly less tax advantageous after 2025, particularly for those in the highest tax bracket.
Tax Payment and Withholding
Take stock of where you stand on estimated tax payments and withholding, based on year-end projections. In particular, make sure you have enough payments made throughout the year to avoid penalties come tax time, and keep in mind that penalties can arise both from underpayments and from the timing of those payments throughout the year.
Tax-Advantaged Contributions
Review your options for contributing to tax-advantaged accounts, such as 401(k)’s, IRAs, and Health Savings Accounts (HSAs). Especially in higher tax years, these accounts can help reduce income while also building assets for future growth.
Ending the Year Right
There is still time to implement planning strategies before the end of the year!
A comprehensive analysis of your tax situation and planning opportunities can significantly improve your current and/or future financial situation.
If you have any questions or would like to speak to our team about your unique situation, please contact us today.
Master’s Wealth Management, Inc. does not provide tax, legal or accounting advice. Please refer to your tax preparer regarding tax planning strategies.
