For most people, tax planning happens in April when they hand documents to their CPA. For business owners, that’s already too late. The most valuable strategies — retirement contributions, Roth conversions, income timing, entity decisions — all need to happen before December 31.
1. Max out your retirement plan contributions
This is the highest-impact move available to most business owners. For 2025, a Solo 401(k) allows total contributions up to $70,000 ($77,500 if you’re 50 or older). Every dollar contributed reduces your taxable income dollar-for-dollar. At a combined 35% marginal rate, maxing a Solo 401(k) saves approximately $24,500 in taxes that year alone.
Timing note: Solo 401(k) employee deferral contributions must be made by December 31. Employer contributions can typically be made up to the tax filing deadline. SEP-IRA contributions can also be made until the filing deadline — but don’t use this as an excuse to wait.
2. Review your estimated tax payments
If your income changed significantly during the year — a big contract, an unexpected slow quarter, the sale of a business asset — your Q4 estimated payment may need adjustment. A quick projection in October or November tells you exactly where you stand and avoids underpayment penalties.
3. Consider a Roth conversion
If your income this year is lower than usual — a slow year, a large retirement contribution reducing your taxable income — it may be an optimal time to convert some pre-tax retirement savings to Roth. Roth conversions are taxed in the year you do them. The strategy is to convert in years when your marginal rate is lower than it will be in the future. This window closes December 31.
4. Accelerate deductions or defer income
If you expect higher income next year, accelerate deductible expenses into the current year — buy equipment, prepay subscriptions, make charitable contributions before December 31. If this year has been unusually high, consider deferring income where possible by invoicing late December for January payment.
5. Review your entity structure for next year
To elect S-Corp status for next year, you must file IRS Form 2553 before December 31 of the current year (or by March 15 for the current year). Year-end is the natural time to run the analysis: what did you earn this year, what does next year look like, and does the S-Corp election pencil out?
The common thread
Every one of these strategies has a deadline on or before December 31. The advisors who deliver the most value aren’t the ones who file the most accurate return in April — they’re the ones having these conversations in October and November, when there’s still time to act. Use our Tax Savings Estimator to see what these strategies could mean for your specific situation.
Have questions about your situation?
A free 30-minute call is the fastest way to get answers specific to you — your income, your business, your goals.
Schedule a Free Call →