3 Quick Fourth Quarter Tax Wins for Business Owners

Your fourth quarter does not need a long tax checklist. It needs three moves done well.

Dana owns an eight person consulting firm structured as an S corporation. Revenue grew, she hired two people, and her bookkeeping slipped a quarter behind. She wanted to decide on her own bonus, an equipment upgrade, and a retirement plan. All three depended on a profit number she did not have yet.

Win 1: Know Your Number, Then Set Your Pay

Every tax decision starts with a reliable profit projection. Close your books through September and estimate the rest of the year. If you run an S corporation, your salary should reflect what your role would reasonably command, supported by documentation. Because salary runs through payroll, changes need to happen before your final payroll of the year.

Your move: Get your projection done this month, then review your salary and any year end bonus.

Win 2: Make Equipment Decisions with Intent

Under current law, qualifying property placed in service this year may be eligible for 100% bonus depreciation or Section 179 expensing. The key phrase is placed in service. Equipment ordered in December but not in use until January generally belongs to next year. And spending a dollar to save a fraction of it in tax is still spending the dollar.

Your move: If a purchase is already planned, make sure it is delivered and in use by December 31.

Win 3: Pick Your Retirement Plan Now

A retirement plan may be one of the most effective ways for owners to build wealth while reducing taxable income. Setup deadlines vary. A 401(k) with employee deferrals generally needs to be in place before deferrals begin, while some other plans can be adopted later. For owners with high, steady profits, a cash balance plan may be worth evaluating.

Your move: Compare your options this month, based on your profit, your age, and your team.

Why These Three Work

Each win rests on documentation, intent, timing, and structure. In October, you still control all four. After December 31, you are reporting decisions instead of making them.

The Bottom Line

Depending on your circumstances, one of these may matter more than the others. A proactive review can help you find out which one before the quarter closes.

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This blog post is for general informational purposes only and is not intended as individualized tax, legal, or financial advice. Please consult with your tax advisor regarding your specific situation.