Most Houston small business owners think of taxes as an April problem. That's the most expensive mistake you can make. By December 31st, the majority of your significant tax moves are off the table — the window has closed. Whatever profit or loss your business has generated is locked in, and whatever deductions you didn't take don't exist anymore.
The good news: if you're working through this checklist in Q4 — not January — you still have time to act on every item here. This is what we walk our clients through each year. Some of it you can do yourself; some requires a conversation with your CPA. The point is to know what's available before the deadline, not after.
Why December 31st Is a Hard Deadline (Not April 15th)
April 15th is the deadline to file your tax return — and in many cases, you can extend that to October. But the deadline to take action on most tax strategies is December 31st of the tax year. The distinction matters enormously.
Strategies like accelerating deductions, buying equipment under Section 179, maxing out retirement accounts, and making charitable contributions all have hard December 31st cutoffs. Once the ball drops, those opportunities disappear for the year. Your CPA can file your return in April, but they can't retroactively change what happened in your business last year.
"The clients who get the best tax outcomes aren't the ones who call us in March. They're the ones who call us in October." — Darshi Kasotia, CPA
The 11-Point Year-End Checklist
We've organized these items in the order most clients need to work through them. The first three are about getting accurate numbers; the rest are about acting on them. None of this is useful without clean books — which is why the first item isn't about taxes at all.
Items 1–3: Income and Deductions
1. Reconcile your books through November
You can't make intelligent tax decisions without accurate numbers. By November 30th, your books should be fully reconciled — every bank account and credit card should match your accounting software, and every transaction should be categorized. If you're behind, this is job one.
2. Run a year-to-date profit and loss projection
Once your books are clean, project where you'll end the year. If you're tracking to a higher income year than expected, you may want to accelerate deductions (pay that January vendor invoice in December, prepay business expenses, buy that equipment now rather than in January). If income is lower than expected, you might defer deductions into the following year when they'll be worth more.
3. Pull forward or defer income strategically
Cash-basis businesses have flexibility here. If you're having a high-income year and expect lower income next year, consider deferring some December invoicing into January — you won't be taxed on income you haven't received yet. If you expect higher income next year, billing and collecting in December may be advantageous. This requires knowing your projection, which is why #2 comes first.
Don't wait until December to have this conversation
We review clients' year-to-date numbers in October so every strategy is available — not just the ones that are still possible in December. Schedule a Q4 planning session now.
Items 4–6: Retirement Contributions and Accounts
4. Max out your SEP-IRA or Solo 401(k)
For self-employed owners and single-member LLC owners, retirement contributions are one of the most powerful tax deductions available. A SEP-IRA allows contributions of up to 25% of net self-employment income, capped at $69,000 for 2026. A Solo 401(k) allows up to $23,000 in employee contributions plus 25% of compensation as employer contributions. These reduce your taxable income dollar for dollar.
Note: SEP-IRA contributions can technically be made up to the tax filing deadline (including extensions). But if you don't have the account set up yet, you need to open it before December 31st. Solo 401(k) plans must be established by December 31st to make contributions for the current year.
5. Consider a SIMPLE IRA contribution boost
If your business has employees and you offer a SIMPLE IRA, ensure you've made all required employer matching contributions for the year. These are both a business deduction and a benefit your team values.
6. Review HSA contributions if you carry a high-deductible health plan
Health Savings Account contributions are deductible above the line — meaning you don't need to itemize to benefit. For 2026, the limit is $4,300 for self-only coverage and $8,550 for family coverage. You can contribute up to the tax filing deadline, but you need to have the HSA account open before year-end.
Items 7–9: Business Purchases and Depreciation
7. Make qualifying equipment purchases before December 31st
Section 179 allows you to deduct the full cost of qualifying business equipment and software in the year of purchase rather than depreciating it over multiple years. For 2026, the Section 179 deduction limit is $1,160,000 (subject to phaseout for large purchases). The equipment must be placed in service — actually used in the business, not just ordered — by December 31st.
8. Evaluate bonus depreciation
Bonus depreciation is being phased down over time. In 2026, you can deduct 40% of the cost of qualifying new and used property in the first year. This is separate from Section 179 and can be layered on top of it. Talk to your CPA about which assets qualify and how to structure purchases to maximize your deduction.
9. Review your vehicle log if you use a vehicle for business
Vehicle deductions are one of the most commonly missed and most commonly audited categories. Whether you're using the standard mileage rate or actual expenses, your mileage log needs to be current through December 31st. If you've been keeping an informal mental track all year, now is the time to reconstruct it from your calendar and receipts before memory fades further.
Items 10–11: Payroll and 1099 Prep
10. Verify payroll records are current and accurate
If you have employees, December is the time to verify that all payroll records are accurate — correct withholding, correct addresses, correct names matching Social Security records. Errors discovered in January during W-2 preparation are stressful and sometimes costly to correct. Also verify that all year-end payroll tax deposits are current — the IRS assesses significant penalties for late deposits.
11. Identify all contractors who need 1099-NEC forms
Any unincorporated individual or entity you paid $600 or more during the year for services needs to receive a 1099-NEC by January 31st. The time to gather W-9 forms from contractors is now — not in January when you're scrambling. Pull a list of every vendor payment over $600, determine which ones require 1099s, and collect any missing W-9 information before year-end.
What Can Actually Wait Until April
Not everything is a December 31st crisis. Here's what genuinely can wait:
- Filing your actual tax return — due March 15th for S-Corps and partnerships, April 15th for sole props and single-member LLCs (and both can be extended)
- SEP-IRA contributions — can be made up to the filing deadline including extensions (but the account must be established by December 31st)
- Gathering tax documents — W-2s, 1099s, and other third-party documents typically arrive in January and February
- Most state filings — Texas franchise tax reports are due May 15th, well after federal deadlines
- Amending prior returns — if you discover errors in a prior year return, you generally have three years to amend
How to Work With Your CPA in Q4 (Not January)
The most valuable thing you can do for your tax situation is shift your CPA relationship from reactive to proactive. Most business owners call their CPA in January or February with a question about last year. By then, every strategy is gone.
What we do with every client at ASK Consultants: we schedule a Q3 or early Q4 planning call, pull their year-to-date numbers, project their full-year income, and walk through which items on this list are worth pursuing given their specific situation. Not every item on this checklist is right for every business — it depends on your income, your entity structure, your cash position, and your goals for next year.
If you're working with a CPA who you only talk to at tax time, you're getting less than half the value of the relationship. If you haven't started the year-end conversation yet and it's still Q4, call us.
