Five Tax Planning Conversations Business Owners Should Have Before Q4
The final quarter of the year is an important window for business owners to review their financial position and make tax planning decisions before year-end. Waiting until tax filing season can limit your options and create unnecessary surprises.
Before Q4 gets underway, have these five tax planning conversations with your tax and financial advisors.
1. What will my tax liability look like this year?
Start with an updated estimate of your business and personal tax liability. Review year-to-date income, expenses, estimated payments, and any significant changes to your business.
An updated projection can help you identify whether you are on track with estimated payments and whether additional tax planning may be appropriate before December 31.
2. Should I make additional business purchases before year-end?
If you are considering equipment, technology, vehicles, or other capital investments, discuss the timing before making the purchase.
Depending on your circumstances and current tax rules, accelerating certain purchases may provide tax benefits. Your advisor can help determine whether the deduction, depreciation treatment, and overall cash impact make sense for your business.
3. Should I adjust my compensation or retirement contributions?
Business owners should review how they are paying themselves and whether there are opportunities to increase retirement contributions before year-end.
For owners of S corporations and other pass-through entities, compensation decisions can have both tax and financial implications. Review these decisions before year-end rather than waiting until tax returns are being prepared.
4. Are there tax strategies I should consider before December 31?
Year-end planning may create opportunities to manage taxable income, charitable contributions, business expenses, retirement contributions, or other financial decisions.
The right strategy depends on your business structure, income, cash flow, and long-term goals. A conversation with your tax advisor can help identify opportunities that are relevant to your situation.
5. What should I change for next year?
Tax planning should not stop at December 31. Use your year-end review to identify changes that could improve your tax position and financial management in the coming year.
Consider whether your entity structure, estimated tax payments, bookkeeping practices, compensation strategy, or financial reporting need to change based on your business's growth.
Start Planning Before the Year Ends
Effective tax planning requires more than finding deductions at tax time. It means understanding your numbers early enough to make informed decisions while you still have time to act.
Before Q4 begins, schedule a conversation with your CPA or tax professional. A proactive review can help you identify potential tax liabilities, evaluate available strategies, and enter the new year with a clearer financial plan.
