Smart Year-End Tax Prep Tips for Small Business Owners

Close up photo of a woman doing taxes with laptop and tax forms in a house

As the end of the year approaches, it’s a critical time for small business owners to get ahead of tax season. Whether you’re wrapping up your first year or have been in business for decades, proactive tax planning can make a big difference when it comes time to file.

At Farmers & Merchants Bank, we understand the unique challenges small businesses face. Here are some helpful year-end tax prep tips to help you close out the year with confidence and set yourself up for a strong start to the new one.

  1. Organize Your Financial Records

Before diving into deductions or tax strategies, make sure your financial records are up to date and organized. That includes:

  • Bank statements
  • Receipts and invoices
  • Payroll reports
  • Expense tracking
  • Loan documentation

A clean and accurate recordkeeping system will make tax time far less stressful—and could help you avoid costly mistakes.

  1. Meet with Your Accountant or Tax Professional

Schedule a year-end meeting with your CPA or tax advisor to discuss potential tax-saving strategies. They can help you:

  • Estimate your tax liability
  • Identify eligible deductions and credits
  • Review your entity structure
  • Make any necessary adjustments before December 31

Early planning could save you money—and headaches—come tax season.

  1. Take Advantage of Deductions

Don’t leave money on the table! Common deductions for small businesses include:

  • Office supplies and equipment
  • Business travel and mileage
  • Employee wages and benefits
  • Marketing and advertising costs
  • Home office expenses

Consider purchasing equipment or making charitable contributions before the end of the year to maximize your deductions.

  1. Review Your Payroll and Contractor Payments

Make sure all employee wages and independent contractor payments are properly recorded. You’ll need to issue W-2s and 1099s early in the new year, so now’s the time to verify records and update any missing information.

  1. Contribute to Retirement Plans

If you offer a retirement plan, consider making contributions before the year ends. This could benefit both your business and your personal tax situation. Options include SEP IRAs, SIMPLE IRAs, and solo 401(k)s, depending on your setup.

  1. Evaluate Inventory and Assets

If you carry inventory, conduct a year-end inventory count. Write down obsolete or unsellable stock and evaluate whether you need to adjust your pricing or purchasing for the new year. Also review depreciable assets and work with your accountant to take advantage of Section 179 or bonus depreciation rules where appropriate.

  1. Plan for Estimated Tax Payments

If you’re self-employed or own a pass-through entity, don’t forget to factor in your fourth quarter estimated tax payment (typically due in January). Underpaying throughout the year can lead to penalties, so it’s worth double-checking your numbers.

  1. Reflect and Plan Ahead

Tax prep is also a great time to reflect on your business performance and set goals for the coming year. Ask yourself:

  • What worked well this year?
  • What could be improved?
  • Are there tools, services, or advisors that could help me grow?

We’re Here to Help Your Business Succeed

At Farmers & Merchants Bank, we’re more than your bank—we’re your partner in success. From business checking accounts to lending solutions and treasury management services, we’re here to support your business every step of the way.

Need help preparing for year-end or looking to streamline your business banking in the new year? Stop by your local branch or give us a call today.

NMLS #718145
published on 12/01/2025

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