A big, unexpected tax bill is one of the most stressful things a small business owner can face. It is also almost always preventable, and most of the moves that prevent it have to happen before December 31. Once the year closes, you are mostly reporting what already happened.
Here is a checklist to work through with your CPA this fall, updated for the 2026 tax year.
✅ 1. Check your estimated tax payments
The IRS and the California Franchise Tax Board both expect self-employed owners to pay estimated tax during the year. Missing or underpaying those payments leads to penalties on top of the balance due, even if you end up owed a refund. If your income ran higher than expected, you may need to pay more before the next deadline to stay out of penalty territory. Our guide to quarterly estimated tax payments and the safe harbor explains how to size them.
✅ 2. Get your books current before you plan
You can’t plan from numbers you don’t have. Last-minute catch-up bookkeeping is expensive and error-prone, and it leaves no time to act. If your books are reconciled monthly, you and your CPA can see what the year really looks like by October or November, while there is still time to do something about it. (Here’s why monthly vs. quarterly bookkeeping matters so much for this.)
✅ 3. Time your equipment purchases
If you plan to buy equipment, vehicles, software or furniture for the business, buying before December 31 can pull the deduction into 2026. The key word is placed in service: the asset has to be in use in the business by year-end, not just ordered or paid for.
- Section 179: for tax years beginning in 2026, you can elect to expense up to $2,560,000 of qualifying property. The limit phases out dollar for dollar once total qualifying purchases exceed $4,090,000.
- Bonus depreciation: 100% first-year depreciation is now permanent for qualified property acquired and placed in service after January 19, 2025.
California doesn’t follow federal bonus depreciation, and its Section 179 limit is far lower than the federal one, so a purchase that is fully deductible on your federal return may be deducted over several years on your California return. For the details, see Section 179 vs. bonus depreciation, and California’s rules.
Don’t buy something just for the deduction. A write-off saves only a fraction of what you spend.
✅ 4. Review your entity structure
As your income grows, the math on your entity changes. S-corp elections, your reasonable salary, and owner distributions all have year-end implications, and your CPA should review them with you every year. We walk through the California break-even in S-corp vs. LLC: which saves Fresno business owners more.
✅ 5. Plan your retirement contributions
Retirement plans are one of the biggest deductions available to owners. The 2026 limits:
- 401(k) and Solo 401(k): up to $24,500 in employee deferrals, plus an $8,000 catch-up at age 50 or older ($11,250 at ages 60 through 63). Total contributions to a defined contribution plan, including employer contributions, are capped at $72,000.
- SEP-IRA: up to 25% of compensation, capped at $72,000 for 2026.
- SIMPLE IRA: up to $17,000 in employee deferrals.
Deadlines differ by plan. SEP-IRA contributions can be made up to the due date of your business return, including extensions. Other plans, including 401(k) salary deferrals, have earlier deadlines, some as early as December 31, so confirm the timing for your plan before year-end. For owners comparing options, we compare SEP, SIMPLE, Solo 401(k) and cash balance plans side by side.
✅ 6. Capture the deductions you’re missing
Home office, vehicle use, equipment, software, professional fees, health insurance premiums: there are more deductions available to small business owners than most people realize. Document them as you go, not in April. Start with the small business tax deductions owners most often miss.
✅ 7. Get ready for 1099s
If you paid independent contractors this year, collect a W-9 from each one now, not in January. For payments made after December 31, 2025, the Form 1099-NEC filing threshold is $2,000 per payee for the year (it used to be $600). Your 2026 payments are the first to fall under the new threshold.
✅ 8. Review your receivables
If you use the accrual method and a customer invoice has become uncollectible, you may be able to deduct it as a bad debt in the year it becomes worthless, provided you have already reported that amount as income. If you use the cash method, an unpaid invoice isn’t deductible, because you never reported the income. (Not sure which method you use? See cash vs. accrual accounting.) Either way, year-end is a good time to chase what is still collectible.
✅ 9. Check your California obligations
California layers its own rules on top of federal: its own income tax rates, the $800-a-year minimum franchise tax (corporations) or annual tax (LLCs), the extra LLC fee once California income reaches $250,000, payroll tax filings, and the depreciation differences in step 3. Make sure nothing falls through the cracks, and make sure your preparer knows both sets of rules.
Plan it with a Fresno CPA
The best year-end moves need a few weeks of lead time. Our business tax planning work is built around getting these decisions made before December 31, not discovered in April. Schedule a free consultation or call 559-372-9213.
This post is general information, not advice for your specific situation. Tax figures are current for the year stated and many are indexed annually. Talk to a CPA before acting on any of it.
