For many business owners in Florence, fall still feels early for taxes. The return is months away. The decisions that change the year are not.
Tax preparation records what already happened. Tax planning shapes the outcome while the year is still open. December 31 is the line for many of those choices. A careful return can report the year accurately. It cannot reopen most of them.
This article is general information about common year-end decisions. It is not tax advice for a particular business.
Preparation looks back. Planning looks ahead.
Tax preparation starts after the year closes. You gather records, report income and expenses, and file. It answers: What do we report for the year that ended?
Tax planning happens while you can still act. It asks what to decide before December 31: estimated payments, the timing of income and expenses, equipment the business needs, retirement contributions, and how a shareholder-employee is paid.
You need both. Preparation without planning often means finding a choice after the date to make it has passed. Planning without current books is a guess. Know where the year stands, decide what is still open, and let the return confirm a year you already managed.
A year-end checklist for business owners
None of these items requires an exotic structure. Each one gets harder, or disappears, once the calendar turns.
Review year-to-date profit and a projected tax. Pull a profit-and-loss through the latest closed month, then sketch the rest of the year: known work, payroll, debt, and ordinary costs. It does not have to be perfect. It has to show whether taxable income is ahead of last year, behind it, or about the same. If the books are months behind, catch them up before you treat any number as a plan.
Check the fourth-quarter federal estimate. For calendar-year individuals, the last 2026 estimated-tax installment is due January 15, 2027. It covers September 1 through December 31. Many sole proprietors, partners, and S corporation shareholders pay business profit on a personal return, so this is often part of the household bill, not a separate corporate form.
You do not have to make the January 15 payment if you file your 2026 Form 1040 or Form 1040-SR by February 1, 2027, and pay the full balance with that return. If you underpay by a due date, the IRS may charge a penalty even when the return later shows a refund. Pay what the year supports, without draining cash the business needs. State estimates, including Alabama, can follow their own calendar.
Time income and expenses on purpose. For many cash-basis businesses, the timing of billing, collection, and payment changes which year the amount lands in. Accrual-basis businesses follow different rules. If a large invoice can go out in December or January, or a needed repair can be finished and paid this year, decide with the projection in view. Do not move income, or create an expense, the business does not have.
Decide on equipment before you buy it. For many assets, the tax result depends on the asset being placed in service by December 31. An order or a deposit is not the same as putting it to work. Buy what the work requires. A purchase made only for a deduction can drain cash the business needed more. Dollar limits change, so confirm the current rule before you count on a write-off.
Settle the retirement plan that fits this year. The deadline depends on the plan.
A SEP can be set up as late as the due date of the business income tax return, including extensions, and employer contributions follow that same date. That is not a reason to wait until spring, when cash is already committed.
A 401(k) feature generally cannot take elective deferrals from pay earned before the feature is adopted. If deferrals for this year are the goal, the plan has to be in place in time for them.
A new SIMPLE IRA generally needs an effective date from January 1 through October 1, with a narrow exception for a brand-new business. For most businesses, the 2026 window has closed. Decide whether another plan still fits this year, or set next year up on purpose. Limits change by year. Confirm the one that applies before you promise a number.
Review S corporation compensation. The corporation must pay reasonable compensation to a shareholder-employee for services before non-wage distributions. Wages are subject to employment taxes. A distribution does not replace pay for the work. There is no single IRS formula. Training, duties, time, comparable pay, and what other employees earn all matter. If wages need to change, run them through this year’s payroll.
Collect Forms W-9 for Form 1099-NEC. Form W-9 asks for a contractor’s name and taxpayer identification number. A missing number is a common reason backup withholding starts, so collect it before the last payment of the year when you can.
For payments made in 2026, file Form 1099-NEC when you paid at least $2,000 for services by someone who is not an employee (including parts and materials), or for attorney fees reported on that form. IRS instructions set the threshold at $2,000 for tax years beginning after 2025, with a possible inflation adjustment beginning in 2027. If you withheld federal income tax under backup withholding, file regardless of the amount.
The form is due January 31, to the IRS and to the recipient, on paper or electronically. January 31, 2027 is a Sunday, so the due date moves to the next business day, February 1, 2027. Form 1099-MISC and other information returns can have different amounts and dates. Use the form that matches the payment.
Close the books through December 31. Reconcile the bank and credit card accounts. Keep personal spending out of the business. Tie payroll, loans, and sales tax to the statements, and save invoices, asset records, mileage logs, and Forms W-9. The projection is only as good as those records.
When to have the conversation
Schedule it while you can still adjust an estimate, run payroll, place an asset in service, or choose a retirement plan for this year. October and November leave room. Early December can still matter. March mostly explains what December already decided. Bring the year-to-date profit-and-loss and the questions still open. A perfect file is not required. A clear picture is.
A steady close to the year
Finances are one of the tools business owners are trusted to manage. Looking ahead while you can still act is faithful stewardship. It is also sound financial guidance: fewer surprises, and a return that matches a year chosen on purpose.
Benford Consulting helps individuals and business owners with tax planning, tax preparation, and bookkeeping, with wisdom, clarity, and integrity.
Next step
If you want a year-end planning conversation before December 31, request a consultation. You can also email kolby@benfordcpa.com with a short note about the decisions still open.
There is no obligation in a first conversation. The goal is the next faithful step before the year closes.