Every December, owners call their CPA and ask what they can do to reduce the year’s tax bill. The honest answer at that point is: not much. The retirement plan should have been set up months ago. The equipment order needs to be placed in service by the 31st. The entity change has to be effective for the whole year.
The window for meaningful year-end planning is open now. It starts closing in November.
Why September
Three reasons. First, you have eight months of actual results. Your income projection for the year is no longer a guess. Second, you have a full quarter to implement whatever you decide. Third, the professionals you need, your CPA, your retirement plan administrator, your banker, still have capacity. By late November, none of them do.
What to look at now
Projected income and tax. Build a realistic estimate of where the year lands. This drives every other decision. If you are having a strong year, deferral and acceleration of deductions matter more. If you are having a weaker year, the opposite may be true.
Retirement plan design. For high-income owners, the difference between a basic 401(k) and a properly designed plan with profit sharing or a defined benefit component can be substantial. But most plans need to be established before year end, and some need to be established well before. September is when this decision needs to be made.
Equipment and capital purchases. With 100 percent bonus depreciation permanently restored for property acquired after January 19, 2025, the timing of capital purchases matters. Equipment needs to be placed in service, not just ordered, by December 31 to count in 2026. Lead times on equipment can run months.
Compensation and distributions. For S corporation owners, the split between salary and distributions should be reviewed against the year’s results. For owners of multiple entities, how income flows between them is a design decision.
Entity structure. If the structure no longer fits, a change is usually cleaner at a year boundary. That means deciding in the fall.
Credits and incentives. The business may be eligible for credits based on what it did this year. Research activities, hiring, energy improvements, and industry-specific credits all have documentation requirements that are easier to satisfy before the year closes.
Estimated payments. The September 15 payment just went out. If the year has changed since your estimates were set, the January payment can be adjusted, and the true-up in April can be planned instead of discovered.
The conversation to have with your CPA
Bring your year-to-date numbers and a projection. Ask three questions. Where do you see the year landing? What decisions need to be made before December 31? What would you do differently if you were me?
If the answers are thin, that is not a criticism of your CPA. It may be a sign that the engagement is scoped around preparation, not strategy. Strategy is a separate engagement with a separate calendar, and September is when it earns its keep.
What we do differently
We work with owners on the design side and coordinate with their CPA on execution. The engagement starts with a full review of the current picture, identifies the decisions that can move the number, and builds a plan with dates. Then we make sure the plan actually gets implemented, because a plan that lives in a memo does not reduce anyone’s tax.
Specifics depend on your situation. For many owners at $300,000 or more in income, the fall planning cycle is where the largest decisions of the year get made.