Year-End Prep: 5 Things to Do Now to Maximize Deductions
It’s never too early to prepare your finances for the year-end — the holidays are coming, and so is tax season. Before you close the books on another year, take a little time to get your finances in shape. A few smart moves now can mean big savings when it’s time to file your taxes.
Here are five easy ways to set yourself up for success (and fewer headaches) come tax time.
1. Make Sure Your Books Are Up to Date
First things first — take a good look at your books. Make sure all your income and expenses are recorded, accounts are reconciled, and everything’s categorized correctly.
This step might not sound exciting, but it’s one of the best ways to catch missed deductions and clean up any errors before tax time.
Pro tip: Double-check that all your receipts are saved and attached to transactions. You’ll thank yourself later if the IRS ever comes knocking!
2. Pay for Next Year’s Expenses Now
If you use the cash method of accounting (most small businesses do), paying for certain expenses before December 31 can help lower your taxable income this year.
Think about prepaying things like:
Office rent
Business insurance
Annual software subscriptions
Supplies you know you’ll need soon.
Just be sure these payments make sense for your cash flow — you don’t want to overdo it and start the new year tight on funds.
3. Upgrade Your Gear or Equipment
Been eyeing a new laptop, printer, or work vehicle? Buying it before year-end could qualify you for valuable tax deductions — like Section 179 or bonus depreciation — which let you write off big purchases faster.
It’s a win-win: your business gets an upgrade, and you get a potential tax break.
4. Add to Retirement or Health Accounts
Now’s a great time to make contributions to your retirement or health savings accounts.
These contributions not only help secure your future — they can also reduce your taxable income right now.
Here’s what to consider:
Solo 401(k) or SEP IRA: Perfect for business owners saving for retirement.
Health Savings Account (HSA): If you’re eligible, you’ll get a deduction and can use the funds tax-free for medical expenses.
Talk with your bookkeeper or financial advisor about what’s best for your situation.
5. Take a Look at Your Income and Invoices
Before the year ends, review your unpaid invoices. Send reminders for any lingering payments so you can close out strong.
Also, depending on your situation, you might decide to hold off invoicing some clients until January — especially if pushing income into next year will help balance your taxes.
Bonus: Go ahead and get organized for 1099s. January will feel a lot smoother if you have everything ready now.
Wrapping It Up
Year-end doesn’t have to feel stressful — it’s really just a chance to take control of your finances and set yourself up for an even better year ahead.
If you’re not sure where to start or want a second pair of eyes on your books, DKC Bookkeeping is here to help. We’ll make sure you’re taking advantage of every deduction you deserve — so you can head into the new year confident and ready to grow.
*Please, before making any decisions, ALWAYS consult your tax professional. If you don’t have one, reach out to us and we would gladly recommend one.
