7 Smart Ways to Save Money on Taxes Before Year-End

Are you bracing for a surprise tax bill this spring? Most business owners feel like tax season sneaks up on them, and by the time they try to act, it’s already too late.

Do you feel like there’s never enough time to plan ahead? With the holidays and year-end chaos looming, it’s easy to put tax planning out of your mind. But that can turn into an expensive mistake.

If you’re reading this mid-November, you still have time to make smart tax moves that could save you thousands come April.

In this article, you’ll learn seven practical strategies to consider before December 31. Strategies that could lower your tax burden. Some steps take just a few minutes, others will require a call with your accountant. But each one of them could help you end the year in a stronger position than where you are today.

Why You Still Have Time but Need to Act Now

If you're reading this in mid-November, you have about six weeks to make strategic tax moves. That’s more runway than most business owners realize.

The problem is that most people wait until mid-December, when options become extremely limited. Holiday chaos hits, family commitments pile up, and suddenly it's December 28 and you're out of moves.

The smartest move is not waiting until year-end to plan. But even if you haven't been planning proactively, November is still early enough to make an impact on your tax bill.

Let's look at what you can still do.

1. Make Your Donations Count With Strategic Charitable Giving

Donating to charity can reduce your tax burden, but only if it fits into your bigger tax picture.

To make charitable donations tax-deductible, you’ll need to itemize. And that’s where smart planning comes in. If your itemized deductions don’t exceed standard deductions, your charitable donations won’t lower your tax bill.

Talk to your accountant about:

• Whether itemizing makes sense for you
• “Bunching” two years of donations into one to exceed the standard deduction
• Using donor-advised funds to maximize tax benefits while spreading charitable giving over time

2. Maximize Your Retirement Contributions

Maximizing retirement contributions is one of the most overlooked strategies we see among small business owners, and it’s one of the most effective for reducing taxes.

Retirement contributions reduce your taxable income dollar-for-dollar, making them one of the most powerful tools for lowering your tax bill. Depending on your tax bracket, this can result in significant savings. But timing matters. Some retirement contributions must be made by December 31, while others can be made up until your tax filing deadline.

If you want to increase 401(k) contributions through payroll, you only have a few pay periods left to do it. You can’t contribute retroactively.

Meet with your accountant now to:

• Review your year-to-date retirement contributions
• Determine if you're on track to maximize contributions
• Understand which deadlines apply to your specific retirement plan type

3. Organize Contractor W-9s Early to Avoid Penalties

While this won’t reduce your taxable income, staying ahead of contractor paperwork helps you avoid IRS penalties, which keeps more money in your pocket.

You can’t file 1099s without W-9s. And if you wait until January, it becomes much harder to track them down. People go on vacation, inboxes get buried, and missed filings can result in penalties for non-compliance.

Start collecting W-9s now. Don't wait until late December to start chasing these down. Send a polite, proactive email to every contractor you've worked with in 2025. Most will respond quickly, especially if you’re not asking at the last minute.

Ask your accountant:

• Do you have a system or template for collecting W-9s efficiently?

Many accounting firms can provide resources to make this process easier.

4. Use Your FSA (or Max Out Your HSA) Before Year-End

If you have a Flexible Spending Account (FSA), now is the time to use up your remaining balance. Most FSAs follow a “use it or lose it” rule, where any funds left after December 31 typically disappear.

Review your balance and schedule any final appointments or purchases for eligible items like glasses, prescriptions, and over-the-counter medical supplies. If you're planning your FSA election for next year, evalutate your contribution level. It’s better to slightly underfund than risk losing unused dollars.

On the other hand, if you have a Health Savings Account (HSA) tied to a high-deductible health plan, you have more flexibility. But the tax benefits are just as powerful.

An HSA offers a triple tax advantage:

• Contributions are tax-deductible
• Growth is tax-free
• Withdrawals for qualified medical expenses are also tax-free

You don’t need to “use it or lose it,” but making a contribution before year-end still lowers your tax bill for this year. And it helps build a long-term healthcare safety net.

5. Decide If You Should Make A Year-End Equipment Purchase

A tax deduction is not free money. You’re still spending cash, so make sure the purchase makes business sense first.

You’ve probably heard this advice: "Buy a truck before year-end to save on taxes!" 

But if you buy a $60,000 truck and save $15,000-$20,000 in taxes, you're still out $40,000-$45,000 in actual cash. Don’t confuse tax strategy with smart spending.

When Year-End Equipment Purchases Make Sense

Equipment purchases are smart if they meet all three criteria:

1. You already planned to buy it (not just for the tax break)
2. You can place it in service before December 31 (not just order it)
3. Your business genuinely needs it to generate revenue or improve operations

BEFORE you make a purchase, ask your accountant about:

• Whether your purchase qualifies for Section 179 or bonus depreciation
• The current bonus depreciation percentage for this year
• How to document the purchase properly in order to claim the deduction

Bottom line: If you need it, buy it. If you don’t, hold off. Let the tax break be the bonus, not the reason.

6. Organize Key Tax Documents Now to Avoid Missing Deductions

The tax deductions you miss are often the ones buried in paperwork. Organizing now means fewer headaches and lower taxes later.

Some of the biggest tax savings come from the least glamorous year-end task: paperwork.

Start gathering the right documentation now, while you still have time to fix gaps and fill in the blanks.

Documents to gather:

• Personal use of business vehicles. You’ll need to report your mileage split to calculate the deductible portion.
• Owner health insurance premiums. Often deductible if you're self-employed.
• Business insurance policies. Workers' comp, general liability, and property insurance may all be deductible.
• Mileage logs. Reconstruct them now if you haven’t been keeping good records.
• Receivables to write off. If you're on accrual accounting, identifying bad debt before year-end can reduce your taxable income.

Create a dedicated folder (digital or physical) for all your year-end tax documents. The more organized you get now, the fewer questions (and surprises) come tax time.

Ask your accountant:

• What documents are critical based on your business structure?
• Are you overlooking deductions because of missing paperwork?

7. Set Up a Tax Savings System that Works Year-Round

The easiest way to stop stressing about taxes is to build a simple, automated system that sets money aside year-round.

The most important move you can make before December 31 might not lower this year’s tax bill, but it can completely change how you feel about tax season next year.

Open a Dedicated Tax Savings Account

Keep it completely separate from your operating and payroll accounts. This account should exist for one reason alone: to cover your future tax bill.

Calculate the Right Percentage to Set Aside

Start with a simple rule of thumb:

• If your business profit is under $100,000, save 25% for taxes
• If your business profit is over $100,000, save 30% for taxes

This covers federal, state, and self-employment taxes in most cases.

Automate the Process

Use your accounting system or bank automation to transfer tax funds regularly. This is where Profit First principles come in: Every dollar that enters your business should be allocated to a specific account, including saving for taxes.

Talk to your accountant about:

• Fine-tuning your tax savings percentages based on your actual situation
• Adjusting your system quarterly based on business performance

Automating your tax savings lowers stress and protects your cash flow when tax season arrives. Instead of scrambling to cover a surprise bill, you’ll already have the funds set aside.

Take Action This Week

Now that you’ve explored these seven year-end tax strategies, you’ve got a clear plan to take some end-of-year steps to reduce your tax burden… before it’s too late.

Most business owners wait too long and end up scrambling through the holidays or overpaying in April. That doesn’t have to be your story.

Like most business owners, you want to avoid surprise tax bills, missed deductions, and last-minute stress. And now you have some specific actions to take, from maxing out retirement contributions to setting up a tax savings account for next year.

Pick two or three of the strategies that make the most sense for your business, and schedule your year-end tax planning meeting. You’ll walk into tax season prepared and more confident than ever.

November gives you that time. Use it wisely.

At Patrick Accounting, we’ve helped hundreds of business owners eliminate year-end chaos with proactive, practical tax guidance. If you’re ready for a partner who helps you plan ahead instead of just filing returns, check out "Who's a Good Fit for Patrick Accounting?" or schedule a call with our team.

Because the best tax surprise… is no surprise at all.

Want to keep building on this momentum?
Once you’ve wrapped up your year-end planning, your next step is to look ahead. Check out our Business Planning & Forecasting Guide. It’ll help you turn your year-end clarity into a confident, numbers-driven plan for Q1 and beyond.