Year-end is one of the last opportunities to influence this year's tax outcome. Some tax decisions are already behind you, determined by decisions made throughout the year. Revenue has been earned, expenses have hit, and payroll has been processed. However, your business tax strategy window is not fully closed.

The opportunities below can still positively influence your tax position and some remain open until the final weeks of December because they depend on transactions that have not yet occurred or elections that remain available.

The following seven areas are worth reviewing before the tax year closes.

1. Recalculate Estimated Tax Payments

Estimated tax payments are based on projections, and those are likely to have veered a bit off from expectation as the year has unfolded. Any business that has added a major customer, completed an acquisition, experienced lower margins, or postponed planned expenses may have a different tax position than it predicted when those initial estimated payments were calculated.

Review year-to-date financial statements before you make the final estimated payment. If taxable income is substantially different than projected, an adjustment may reduce underpayment penalties or reveal that estimated payments exceed the current projection.

2. Review Capital Purchases Scheduled Prior to Year-End

Is your business still looking to purchase equipment or technology before year-end? Have any that are already scheduled? Review the impact on your tax liability so you can decide the optimal timing to complete the transaction.

The “when” of the asset purchase — and when it is placed into service — may affect depreciation deductions for the current tax year. Your operational need for the purchase is no doubt your first consideration, but don’t forget to consider tax timing.

3. Evaluate and Confirm Owner Compensation Before You Finalize Payroll

For S corporations, reasonable compensation gets a lot of IRS scrutiny. Review owner compensation to confirm that salaries remain reasonable in light of profitability and distributions taken throughout the year.

If profitability has gone as expected, you may not need to make any adjustments, but if anything is amiss, this is your chance. You won’t be able to make adjustments once the last payroll of the year is finalized and Forms W-2 have been prepared.

4. Explore Tax Loss Harvesting

If your investment portfolio includes assets that have declined in value, consider tax loss harvesting, a strategy in which you use those losses to offset taxable capital gains. If total capital losses exceed your gains for the year, you can apply up to $3,000 of the remaining loss against other taxable income, with additional losses carried forward to future tax years.

Investors who want to continue holding the investment can often repurchase it later. The IRS wash sale rule, however, generally disallows the loss if the same or a substantially identical security is purchased within 30 days before or after the sale.

While many investors review their portfolios near year-end, you can evaluate tax-loss harvesting throughout the year, whenever market conditions create an opportunity. Even when markets are up, dispersion is an opportunity for impactful tax-loss harvesting.

5. Review Retirement Contribution Deadlines

Contribution limits and filing deadlines vary for each major type of retirement plan. SEP IRAs, Solo 401(k)s, SIMPLE IRAs, and qualified retirement plans all have their own unique funding requirements. Some contributions must be made before December 31. Others allow additional time, provided the appropriate plans are already in place.

Book a year-end meeting with your CPA to get some clarity on which contributions remain available for the current tax year and which deadlines have already passed.

6. Review Income and Expense Timing

Is your business using the cash method or the accrual method? Cash method businesses have a bit more flexibility over the timing of some receipts and payments than accrual users.

If you expect any large invoices, vendor payments, or customer collections near year-end, examine how those transactions may affect taxable income before you process them. Your chosen accounting method will determine which planning opportunities remain available.

These decisions should always reflect legitimate business activity. The calendar is only one factor.

7. Evaluate Planned Bonuses For Tax Opportunities

Bonuses affect employee compensation, but that’s not all — they may also affect payroll taxes, business deductions, retirement contributions, and taxable income. If you’ve planned year-end bonuses, ask your CPA about the operational and tax consequences of the exact timing and how they’re handled.

8. Decide What Needs to Change on January 1

Alas, some of the best tax planning opportunities either can’t happen so late in the year or see minimal effects from a late pivot. We mean things like:

• A change to your entity elections
• A redesign of owner compensation structure
• Improving bookkeeping procedures
• A quarterly tax planning process

All of these produce better results when your business addresses them early and follows the strategy throughout the year. Year-end is a natural point for you to decide what should change once the new tax year begins.

While it won’t change the outcome for this year, it is likely to prove even more valuable in the long run than a search for one final deduction. Meet with an experienced CPA before year-end to discuss changes that could affect both this year's return and next year's strategy. You’ll leave the year with a clearer understanding of where the business stands and where planning should begin next.