Your December Tax Checklist: 7 Moves Small Business Owners Should Make Before Year-End

Introduction

December isn’t just about holidays — it’s the final window to make decisions that can dramatically lower your tax bill. Many of the most powerful tax strategies must be completed by December 31st. Waiting until April is too late.

Here are 7 essential year-end steps that small-business owners, locums, and contractors should tackle right now.

1. Review Your Expected Income and Adjust Where Needed

Project your total income for the year.

If your income is higher than expected, you may be:

• Pushed into a higher tax bracket
• Triggering phaseouts for deductions
• Losing benefits like QBI or credits

December moves:

• Accelerate expenses
• Delay income
• Prepay certain business costs
• Make charitable contributions

This single exercise can meaningfully alter your tax outcome.

2. Max Out Retirement Contributions (Solo 401k, SEP, or Cash Balance Plan)

Retirement plans are the most powerful way to reduce taxable income.

For Locums & 1099s:

A Solo 401k allows:

• Up to $23,000 employee deferral
• Up to ~$46,000 employer contribution
• Total up to $69,000 (2024 est.)

For high earners:

A Cash Balance Plan can push deductions into six figures.

The earlier you act in December, the easier the paperwork.

3. Align Your Health Insurance Strategy With Your Entity Structure

This is where most people lose money.

Depending on your structure:

• Sole Props deduct SEHI directly
• S-Corps must flow premiums through W-2
• Partnerships must use Guaranteed Payments
• C-Corps can provide tax-free benefits

December is the best time to fix incorrect setups.

4. Fund Your HSA If Eligible

If you have a High-Deductible Health Plan:

• Individual limit: $4,300 (2025 est.)
• Family: $8,550
• Catch-up (55+): $1,000

HSAs reduce taxable income AND grow tax-free.

5. Clean Up Your Bookkeeping & Reconcile Accounts

Accurate records = more deductions.

Double-check:

• Mileage
• Subscriptions
• Home office
• Equipment purchases
• Software tools
• Business meals

Many deductions are missed simply because they’re not tracked.

6. Determine Whether You Need to Make a Q4 Estimated Tax Payment

Avoid penalties by checking:

• income changes
• withholding levels
• business profit spikes
• side gig revenue

7. Review Your Entity Structure for 2025

If your revenue has changed significantly, your structure might no longer be ideal.

S-Corp?

Partnership?

C-Corp?

Staying a sole prop?

This is the ideal time of year to re-evaluate.

Conclusion

What you do in December can save you thousands in April.

Small steps → big tax savings.

If you’d like help planning the right moves for your business, MyPensionTree advisors are here this holiday season.