The Year-End Tax Prep Guide for Small Businesses

Year-end tax prep does not have to be chaotic. The owners who stay calm in January are the ones who spent December getting organized—not scrambling the night before their tax appointment.

This guide walks you through the exact steps to prepare for tax season now, eliminate surprises, and make filing smoother for you (and your tax pro).

1. Confirm Your Books Are Up to Date Through November

Before you think about forms or deductions, your books must be clean.

That means:

• all accounts reconciled

• transactions categorized

• receipts uploaded

• A/R and A/P reviewed

• personal expenses removed

• loan payments properly split (principal vs. interest)

Clean books = accurate tax return.

2. Review Your Income for Accuracy

Income discrepancies are a common IRS red flag.

Check:

• Stripe/PayPal totals vs. bookkeeping totals

• large deposits labeled correctly

• refunds or chargebacks accounted for

• sales tax separated from revenue (if applicable)

Accuracy now avoids amendments later.

3. Gather All Deductible Expenses

Quick wins include:

• software

• advertising and marketing

• professional services (legal, bookkeeping, coaching, tax prep)

• supplies

• travel

• meals with clients

• home office deduction

• phone and internet use

• equipment and tools

• education (courses, certifications)

If it directly supports your business, categorize it properly.

4. Confirm Contractor Information (W-9s)

If you paid any contractor $600 or more in 2025, you must issue a 1099-NEC.

Make sure you have:

• a completed W-9

• legal business name

• EIN or SSN

• mailing address

• correct total paid

• method of payment (checks/ACH count; credit cards do not)

Do not wait until January—contractors delay, move, or ignore emails.

5. Check Mileage, Vehicle Expenses, and Travel

If you use your vehicle for business:

• confirm mileage logs

• note business vs. personal trips

• check fuel receipts

• gather oil change/maintenance receipts

• choose either standard mileage or actual expenses

For travel:

• document purpose

• save lodging receipts

• track meals

• keep itineraries if needed

Clean documentation protects your deductions.

6. Review Major Purchases for Depreciation or Section 179

If you bought:

• equipment

• tools

• computers

• furniture

• machinery

…you may qualify for depreciation, Section 179, or bonus depreciation.

Your tax pro needs:

• purchase dates

• invoices

• asset descriptions

• cost

• financing details (if applicable)

This is one of the easiest ways to lower taxable income.

7. Estimate Your Final Tax Liability

Use your year-to-date profit to estimate:

• income tax

• self-employment tax

• S-Corp payroll taxes

• quarterly estimated tax needs

Catch underpayments early to avoid penalties.

8. Make Last-Minute Tax Moves (Before December 31)

Depending on your situation, you may benefit from:

• accelerating deductible expenses

• contributing to a Solo 401(k) or SEP IRA

• paying outstanding vendor bills

• prepaying rent (if appropriate)

• making charitable donations

• delaying invoicing until January (cash-basis only)

These moves must occur before the year ends.

9. Prepare for 1099s, W-2s, and Payroll Reporting

If you have contractors or employees, gather:

• total wages

• payroll summaries

• benefits paid

• withheld taxes

• retirement contributions

Your payroll provider will need this information early.

10. Create a “Tax Season Folder” (Digital or Physical)

Inside, include:

• P&L and Balance Sheet

• receipts and documentation

• contractor W-9s

• payroll reports

• depreciation info

• loan statements

• mileage logs

• inventory adjustments

• business registration documents

Handing this over to your tax pro = faster turnaround and fewer questions.

Final Thoughts

The smoother your year-end prep is, the cleaner and more accurate your tax return will be. December is the month to get ahead—so January feels like a fresh start, not a financial mess.

If you want help getting your books tax-ready—or want us to handle your year-end prep entirely—schedule a Year-End Wrap-Up Session and start January confident and organized.

The Money-Smart Business Blog provides educational content designed to help small business owners make informed decisions. This content is not tax, legal, or financial advice and should not be used as a substitute for personalized guidance. Always consult with a licensed professional before taking action based on this information.