This article will walk small business owners through the essential steps they should take before year-end:
Accelerating expenses - If your business has the cash flow and is acquiring new equipment or other assets, you can consider accelerating the expense as a tactic to lower your income and tax liability.
Reviewing deductions:
Are your books in order so far? This means all your income and expenses have been accounted for to date, either on a spreadsheet, or in your bookkeeping software. Remember to reconcile your bank accounts for the year, including all interest paid on your business credit cards and loans. You will need the end of year balances on those accounts for tax preparation.
Did you create and update your Mileage log? If not yet, review, and document all your business miles for the year as well as your personal miles. Use your invoices and receipts to recreate past business activities. Important - Commuting is not deductible. Write down your end-of-year mileage on December 31st.
Handling Montana withholding and final payroll - Payroll liabilities for December are due in January 2026, make sure to budget for that.
Cleaning up W-2 and 1099 issues - Confirm you have all your employee’s paperwork complete and up to date, this includes federal documents Form I-9 and W-4, and the state Form MW-4. For your independent contractors, you will need their W-9s to issue 1099-NEC promptly and accurately.
Reviewing retirement plans and contributions - Think about starting retirement plans for you and your employees if applicable and max out your contributions if possible.
Bonuses, and owner compensation - Active shareholders and owners in S-Corps should be paying themselves wages and could include bonuses as part of their compensation. Partners in Partnerships do not receive wages but could have guaranteed payments deductible to the business. Disregarded entities reporting Sch C taking draws from their income are not considered wages and are not deductible.
Finally, keep a clean separation of business and personal expenses, open business accounts for business only, and document your cash contributions to the business accordingly. We are available to assist you with the end of the year process, answer any questions you may have, and point you in the right direction to a successful New Year.
Kassidy Wagner
Hiring Your Kids in Your Business
Learn how hiring your children in your family business can reduce taxes while teaching valuable work skills. This article explains payroll rules, reasonable wages, and how earned income can help your children begin building long-term financial security through a Roth IRA.
Bjorn Swanson
The Depreciation You're Leaving on the Table
Cost segregation can be a powerful tax planning strategy, but it isn't the right fit for every property. Learn when it makes sense, how bonus depreciation changes the equation, and what property owners should consider before moving forward.
Kassidy Wagner
Should I Just S Corp?
S Corporation tax savings are real, but this article explains why they only make sense at certain profit levels, how Montana-specific cash flow realities change the math, and what business owners should evaluate before making an election that adds permanent complexity.
