Most of what you can do to lower your 2026 tax bill has to happen before December 31, and nearly all of it depends on numbers you can trust. This guide covers twelve moves for small business owners, roughly in the order to tackle them: get a real profit estimate, time equipment and retirement contributions, true up owner pay, and line up the 1099, mileage, and document trail your CPA will ask for. You won’t need all twelve. You do need to know which ones apply to you while there’s still time to act.
Key takeaways
- Build a real profit estimate by mid-November. Every other move depends on it.
- Equipment counts for 2026 only if it’s placed in service by December 31. Section 179 is $2,560,000 for 2026, and 100% bonus depreciation is permanent.
- The 1099-NEC and 1099-MISC threshold is $2,000 for 2026 payments, with forms due February 1, 2027.
- Mileage has two rates this year: 72.5 cents through June 30 and 76 cents from July 1.
Why the good moves need clean numbers first
Every planning move is a bet on a number. How much to put into a retirement plan, whether to buy the new mower this year, whether your S-corp salary is high enough: each one is only as good as your profit estimate. So the first job in November isn’t strategy. It’s making sure the ledger is caught up, every bank and card account matches its statement, and nothing is parked in a miscellaneous account waiting for someone to sort it out.
Here’s what that looks like. Suppose a landscaping company with three crews shows $412,000 of revenue and $301,000 of expenses through September, which is $111,000 of profit. The owner starts pricing a new mower. Then the September reconciliation turns up $9,600 of card charges nobody categorized, nearly all of it fuel, repairs, and supplies. Profit is really $101,400. Nothing about the business changed. The picture of it did.
If you’re behind, this is fixable, and the catch-up bookkeeping guide lays out the order to work in. Software sorts transactions quickly, but a person should review the result before you make a five-figure decision on it, which is the argument in our guide to AI and bookkeeping.
Moves 1 to 4: Profit, equipment, retirement, and owner pay
1. Get a mid-Q4 profit estimate
Pull a year-to-date profit and loss through October, then add a realistic November and December. Your bookkeeper can produce the first half; the second half is your knowledge of the season ahead. (The QuickBooks Online setup guide shows which reports to run.) Send the estimate to your CPA and ask what you’ll owe and what you should have paid by year-end. The Q4 estimated payment for individuals, sole proprietors, partners, and S-corp owners is due January 15, 2027. The usual safe harbor is 90 percent of this year’s tax or 100 percent of last year’s, though higher earners face a different threshold, so let your CPA confirm.
2. Equipment: Section 179 and 100% bonus depreciation
For 2026 the Section 179 limit is $2,560,000, phasing out once qualifying purchases pass $4,090,000, according to the IRS’s 2026 inflation adjustments. Few small businesses come near either number. The bigger change is that 100% bonus depreciation is now permanent for qualifying property acquired and placed in service after January 19, 2025, one of several shifts in what the 2025 tax law means for small businesses. Two cautions. A deduction is not a discount, so buy what the business needs. And the asset must be placed in service, meaning delivered, installed, and ready to use, by December 31. A truck that arrives January 3 belongs to 2027, whenever you signed.
3. Retirement plan contributions
The 401(k) and IRA limits both went up for 2026. The 401(k) employee deferral is $24,500, with an $8,000 catch-up at 50 and older and $11,250 for ages 60 to 63. IRAs allow $7,500 plus a $1,100 catch-up, SIMPLE plans $17,000 plus $4,000, and the overall defined-contribution or SEP limit is $72,000, per the IRS’s 2026 retirement limits announcement. A 401(k) deferral has to come out of a paycheck by December 31, while IRA and HSA contributions for 2026 can still be made until April 15, 2027. Ask your CPA or plan administrator how your plan type handles later contributions.
4. S-corp salary true-up
If you own an S corporation, your salary has to be reasonable for the work you actually do, and your payroll records should show it. There is no magic percentage. A better test is what it would cost to hire someone else to do your job. Compare year-to-date W-2 wages with profit now; if the salary looks thin, fix it through payroll before December 31, not with a January adjustment. And if the company pays your health insurance, ask your CPA how that gets reported on your W-2.
Moves 5 to 8: Timing, write-offs, and the 1099 threshold
5. Bonuses and their timing
A cash-basis business deducts a bonus in the year it pays it, and the employee reports it in the year they receive it. A bonus paid on the last December payday lands on the 2026 return and W-2; one paid on January 2 lands in 2027. Bonuses run through payroll with withholding and payroll taxes, so put them on the final payroll run instead of cutting a separate check. Accrual-basis companies have their own rules for bonuses declared in December and paid later, so ask your CPA.
6. Prepaying and deferring (cash-basis businesses)
On the cash basis, expenses count when you pay them and income counts when you receive it. That gives you two levers: pay some expected expenses before December 31, and hold some invoicing until January. Prepaying a few months of software or insurance is common; prepaying anything that covers a long stretch is where the rules get tricky, so ask first. And income counts when it’s available to you, so a check left in a drawer doesn’t help. Whatever you push out of 2026 shows up in 2027, and if next year looks bigger, you’ve only moved the bill.
7. Bad debts and inventory write-downs
If you use accrual accounting, an invoice you’ve truly given up on may be deductible as a bad debt, provided you can show the effort: dates, reminders, a customer who closed or went silent. Cash-basis businesses never recorded that income, so there’s nothing to write off. Inventory is similar. Damaged, obsolete, or missing stock has to be found and recorded before it reduces your profit, which is why a December count matters. Your CPA decides what’s deductible; your job is to hand over an aging report and a count sheet that make the case.
8. W-9s and the new $2,000 1099 threshold
For payments you make in 2026, the filing threshold for Forms 1099-NEC and 1099-MISC is $2,000, up from $600, and it’s indexed for inflation starting in 2027, according to the IRS instructions for Forms 1099-MISC and 1099-NEC. Recipient copies of both are due February 1, 2027, because January 31 lands on a Sunday, and the 1099-NEC goes to the IRS that day too (confirm on IRS.gov once the 2027 tax calendar is posted). A higher threshold means fewer forms, not less homework. You still need to know which vendors crossed it, and you still need a completed W-9 from each. Pull everyone you’ve paid $2,000 or more this year and check the file. In November that’s an afternoon. In late January it’s a scramble.
Moves 9 to 12: Mileage, giving, structure, and the paper trail
9. Mileage: the two-rate year
The standard mileage rate is 72.5 cents per business mile from January 1 through June 30, 2026, and 76 cents from July 1 through December 31, per the IRS’s standard mileage rates page. It’s the first mid-year change since 2022, so a single annual total won’t do. Say a self-employed electrician logged 6,400 business miles in the first half and 5,100 in the second. That’s 6,400 × $0.725 = $4,640, plus 5,100 × $0.76 = $3,876, for $8,516. Applying 72.5 cents to all 11,500 miles would understate the deduction by $178.50; applying 76 cents to all of them would overstate it by $224. Log the date of every trip and the split becomes a filter, not a reconstruction.
10. Charitable giving from the business
How a gift is treated depends on your entity type; for sole proprietors and S-corp owners it often lands on the personal return. From the bookkeeping side, keep the acknowledgment letter for every donation and record gifts in their own account so they’re easy to pull out. Sponsorships that come with advertising are usually marketing, not charity. Then ask your CPA whether itemizing beats the 2026 standard deduction: $16,100 for single filers and $32,200 for married couples filing jointly.
11. Entity check for next year
December is the last easy moment to reconsider structure for 2027. If a sole proprietorship or single-member LLC has grown into real profit, ask your CPA whether an S-corp election would pay off after the cost of running payroll; for calendar-year 2027, Form 2553 is due March 15, 2027. Look at the Qualified Business Income deduction too. It’s permanent at 20 percent, with 2026 thresholds of $201,750 for single filers and $403,500 for joint filers, plus a new $400 minimum deduction for owners with at least $1,000 of qualified business income.
12. The document list for your CPA
Your CPA will want roughly the same package every January. Start collecting it now:
- Year-end profit and loss and balance sheet, with every bank, card, and loan account reconciled through December 31
- Fixed-asset list with purchase dates, costs, and the date each item was placed in service
- Payroll summaries and the totals behind Forms 941 and 940
- Vendor list with W-9s and 2026 payment totals
- Mileage logs, split at June 30
- Inventory count sheets, if you carry stock
- Loan statements showing year-end balances and interest paid
- Receipts for large or unusual purchases, plus owner contributions and draws or distributions
If you’d like help building that habit, our guide to how to choose a bookkeeper covers what to ask, and the small business bookkeeping guide describes the monthly routine that makes this list nearly automatic.
Frequently asked questions
Do I have to buy equipment to get a tax benefit before year-end?
No. Section 179 and bonus depreciation only help if you buy something, and spending money to save a fraction of it in tax rarely leaves you ahead. If a purchase was already planned and the cash is there, placing it in service by December 31 can pull the deduction into 2026. Otherwise, skip it.
What if my bookkeeping is months behind right now?
Get current enough to estimate this year’s profit first, then fill in older gaps. A rough estimate that a person has reviewed beats none, and your CPA can tell you which gaps matter for 2026. The catch-up guide above lays out the order in detail.
What does my bookkeeper do at year-end, and what does my CPA do?
Your bookkeeper keeps the ledger accurate: reconciled accounts, categorized transactions, clean reports, and the supporting lists. Your CPA decides tax treatment, such as which deductions to take, how assets are depreciated, and what to pay in estimates. BooXkeeping is a bookkeeping company, not a CPA firm, so we hand your CPA a clean package and they make the calls.
Where to go from here
Start with the profit estimate this week, then work down the list in whatever order fits your business. Put the dates that matter on your calendar now: December 31 for equipment, bonuses, and cash-basis timing; January 15 for the Q4 estimated payment; February 1 for W-2s and 1099-NECs. If you’d rather hand the ledger side of this to someone, that’s what a BooXkeeping team is for. A free consultation is a low-pressure way to see where your records stand.
Reviewed for tax year 2026.
BooXkeeping is a bookkeeping company, not a CPA firm or a law firm. This article is general information for business owners, not tax, legal, or financial advice. Rules change and your situation is specific, so confirm anything here with your CPA or attorney before acting on it.
Most of what you can do to lower your 2026 tax bill has to happen before December 31, and nearly all of it depends on numbers you can trust. This guide covers twelve moves for small business owners, roughly in the order to tackle them: get a real profit estimate, time equipment and retirement contributions, true up owner pay, and line up the 1099, mileage, and document trail your CPA will ask for. You won’t need all twelve. You do need to know which ones apply to you while there’s still time to act.
Key takeaways
- Build a real profit estimate by mid-November. Every other move depends on it.
- Equipment counts for 2026 only if it’s placed in service by December 31. Section 179 is $2,560,000 for 2026, and 100% bonus depreciation is permanent.
- The 1099-NEC and 1099-MISC threshold is $2,000 for 2026 payments, with forms due February 1, 2027.
- Mileage has two rates this year: 72.5 cents through June 30 and 76 cents from July 1.
Why the good moves need clean numbers first
Every planning move is a bet on a number. How much to put into a retirement plan, whether to buy the new mower this year, whether your S-corp salary is high enough: each one is only as good as your profit estimate. So the first job in November isn’t strategy. It’s making sure the ledger is caught up, every bank and card account matches its statement, and nothing is parked in a miscellaneous account waiting for someone to sort it out.
Here’s what that looks like. Suppose a landscaping company with three crews shows $412,000 of revenue and $301,000 of expenses through September, which is $111,000 of profit. The owner starts pricing a new mower. Then the September reconciliation turns up $9,600 of card charges nobody categorized, nearly all of it fuel, repairs, and supplies. Profit is really $101,400. Nothing about the business changed. The picture of it did.
If you’re behind, this is fixable, and the catch-up bookkeeping guide lays out the order to work in. Software sorts transactions quickly, but a person should review the result before you make a five-figure decision on it, which is the argument in our guide to AI and bookkeeping.
Moves 1 to 4: Profit, equipment, retirement, and owner pay
1. Get a mid-Q4 profit estimate
Pull a year-to-date profit and loss through October, then add a realistic November and December. Your bookkeeper can produce the first half; the second half is your knowledge of the season ahead. (The QuickBooks Online setup guide shows which reports to run.) Send the estimate to your CPA and ask what you’ll owe and what you should have paid by year-end. The Q4 estimated payment for individuals, sole proprietors, partners, and S-corp owners is due January 15, 2027. The usual safe harbor is 90 percent of this year’s tax or 100 percent of last year’s, though higher earners face a different threshold, so let your CPA confirm.
2. Equipment: Section 179 and 100% bonus depreciation
For 2026 the Section 179 limit is $2,560,000, phasing out once qualifying purchases pass $4,090,000, according to the IRS’s 2026 inflation adjustments. Few small businesses come near either number. The bigger change is that 100% bonus depreciation is now permanent for qualifying property acquired and placed in service after January 19, 2025, one of several shifts in what the 2025 tax law means for small businesses. Two cautions. A deduction is not a discount, so buy what the business needs. And the asset must be placed in service, meaning delivered, installed, and ready to use, by December 31. A truck that arrives January 3 belongs to 2027, whenever you signed.
3. Retirement plan contributions
The 401(k) and IRA limits both went up for 2026. The 401(k) employee deferral is $24,500, with an $8,000 catch-up at 50 and older and $11,250 for ages 60 to 63. IRAs allow $7,500 plus a $1,100 catch-up, SIMPLE plans $17,000 plus $4,000, and the overall defined-contribution or SEP limit is $72,000, per the IRS’s 2026 retirement limits announcement. A 401(k) deferral has to come out of a paycheck by December 31, while IRA and HSA contributions for 2026 can still be made until April 15, 2027. Ask your CPA or plan administrator how your plan type handles later contributions.
4. S-corp salary true-up
If you own an S corporation, your salary has to be reasonable for the work you actually do, and your payroll records should show it. There is no magic percentage. A better test is what it would cost to hire someone else to do your job. Compare year-to-date W-2 wages with profit now; if the salary looks thin, fix it through payroll before December 31, not with a January adjustment. And if the company pays your health insurance, ask your CPA how that gets reported on your W-2.
Moves 5 to 8: Timing, write-offs, and the 1099 threshold
5. Bonuses and their timing
A cash-basis business deducts a bonus in the year it pays it, and the employee reports it in the year they receive it. A bonus paid on the last December payday lands on the 2026 return and W-2; one paid on January 2 lands in 2027. Bonuses run through payroll with withholding and payroll taxes, so put them on the final payroll run instead of cutting a separate check. Accrual-basis companies have their own rules for bonuses declared in December and paid later, so ask your CPA.
6. Prepaying and deferring (cash-basis businesses)
On the cash basis, expenses count when you pay them and income counts when you receive it. That gives you two levers: pay some expected expenses before December 31, and hold some invoicing until January. Prepaying a few months of software or insurance is common; prepaying anything that covers a long stretch is where the rules get tricky, so ask first. And income counts when it’s available to you, so a check left in a drawer doesn’t help. Whatever you push out of 2026 shows up in 2027, and if next year looks bigger, you’ve only moved the bill.
7. Bad debts and inventory write-downs
If you use accrual accounting, an invoice you’ve truly given up on may be deductible as a bad debt, provided you can show the effort: dates, reminders, a customer who closed or went silent. Cash-basis businesses never recorded that income, so there’s nothing to write off. Inventory is similar. Damaged, obsolete, or missing stock has to be found and recorded before it reduces your profit, which is why a December count matters. Your CPA decides what’s deductible; your job is to hand over an aging report and a count sheet that make the case.
8. W-9s and the new $2,000 1099 threshold
For payments you make in 2026, the filing threshold for Forms 1099-NEC and 1099-MISC is $2,000, up from $600, and it’s indexed for inflation starting in 2027, according to the IRS instructions for Forms 1099-MISC and 1099-NEC. Recipient copies of both are due February 1, 2027, because January 31 lands on a Sunday, and the 1099-NEC goes to the IRS that day too (confirm on IRS.gov once the 2027 tax calendar is posted). A higher threshold means fewer forms, not less homework. You still need to know which vendors crossed it, and you still need a completed W-9 from each. Pull everyone you’ve paid $2,000 or more this year and check the file. In November that’s an afternoon. In late January it’s a scramble.
Moves 9 to 12: Mileage, giving, structure, and the paper trail
9. Mileage: the two-rate year
The standard mileage rate is 72.5 cents per business mile from January 1 through June 30, 2026, and 76 cents from July 1 through December 31, per the IRS’s standard mileage rates page. It’s the first mid-year change since 2022, so a single annual total won’t do. Say a self-employed electrician logged 6,400 business miles in the first half and 5,100 in the second. That’s 6,400 × $0.725 = $4,640, plus 5,100 × $0.76 = $3,876, for $8,516. Applying 72.5 cents to all 11,500 miles would understate the deduction by $178.50; applying 76 cents to all of them would overstate it by $224. Log the date of every trip and the split becomes a filter, not a reconstruction.
10. Charitable giving from the business
How a gift is treated depends on your entity type; for sole proprietors and S-corp owners it often lands on the personal return. From the bookkeeping side, keep the acknowledgment letter for every donation and record gifts in their own account so they’re easy to pull out. Sponsorships that come with advertising are usually marketing, not charity. Then ask your CPA whether itemizing beats the 2026 standard deduction: $16,100 for single filers and $32,200 for married couples filing jointly.
11. Entity check for next year
December is the last easy moment to reconsider structure for 2027. If a sole proprietorship or single-member LLC has grown into real profit, ask your CPA whether an S-corp election would pay off after the cost of running payroll; for calendar-year 2027, Form 2553 is due March 15, 2027. Look at the Qualified Business Income deduction too. It’s permanent at 20 percent, with 2026 thresholds of $201,750 for single filers and $403,500 for joint filers, plus a new $400 minimum deduction for owners with at least $1,000 of qualified business income.
12. The document list for your CPA
Your CPA will want roughly the same package every January. Start collecting it now:
- Year-end profit and loss and balance sheet, with every bank, card, and loan account reconciled through December 31
- Fixed-asset list with purchase dates, costs, and the date each item was placed in service
- Payroll summaries and the totals behind Forms 941 and 940
- Vendor list with W-9s and 2026 payment totals
- Mileage logs, split at June 30
- Inventory count sheets, if you carry stock
- Loan statements showing year-end balances and interest paid
- Receipts for large or unusual purchases, plus owner contributions and draws or distributions
If you’d like help building that habit, our guide to how to choose a bookkeeper covers what to ask, and the small business bookkeeping guide describes the monthly routine that makes this list nearly automatic.
Frequently asked questions
Do I have to buy equipment to get a tax benefit before year-end?
No. Section 179 and bonus depreciation only help if you buy something, and spending money to save a fraction of it in tax rarely leaves you ahead. If a purchase was already planned and the cash is there, placing it in service by December 31 can pull the deduction into 2026. Otherwise, skip it.
What if my bookkeeping is months behind right now?
Get current enough to estimate this year’s profit first, then fill in older gaps. A rough estimate that a person has reviewed beats none, and your CPA can tell you which gaps matter for 2026. The catch-up guide above lays out the order in detail.
What does my bookkeeper do at year-end, and what does my CPA do?
Your bookkeeper keeps the ledger accurate: reconciled accounts, categorized transactions, clean reports, and the supporting lists. Your CPA decides tax treatment, such as which deductions to take, how assets are depreciated, and what to pay in estimates. BooXkeeping is a bookkeeping company, not a CPA firm, so we hand your CPA a clean package and they make the calls.
Where to go from here
Start with the profit estimate this week, then work down the list in whatever order fits your business. Put the dates that matter on your calendar now: December 31 for equipment, bonuses, and cash-basis timing; January 15 for the Q4 estimated payment; February 1 for W-2s and 1099-NECs. If you’d rather hand the ledger side of this to someone, that’s what a BooXkeeping team is for. A free consultation is a low-pressure way to see where your records stand.
Reviewed for tax year 2026.
BooXkeeping is a bookkeeping company, not a CPA firm or a law firm. This article is general information for business owners, not tax, legal, or financial advice. Rules change and your situation is specific, so confirm anything here with your CPA or attorney before acting on it.