The CPA’s Guide to Year-End Tax Planning for Business Owners

How to maximize savings, reduce audit risk, and keep more of what you earn before December 31.

Most business owners don’t realize the most expensive bill they pay each year isn’t payroll, rent, or insurance — it’s taxes. And the painful part? Most of them are paying far more than the law requires simply because they wait too long to act.

The IRS rewards proactive planning. Not scrambling in March or “buy a truck in December.” Real planning (the kind that changes the structure of your income, the way your business pays you, and the timing of your deductions) only works before the year closes.

You can’t build a strategy once the year is over. You can only report what has already happened. This guide walks you through the key moves business owners should explore while there's still time to change the year-end outcome.

1. Start With a Year-End Projection (Your “Baseline”)

You cannot solve a tax problem you haven’t diagnosed.

A year-end projection is the single most important step business owners skip, and the one that costs them the most money later. A baseline projection shows:

• What your taxes will be if you change nothing
• Where your tax problem lives (active income, passive income, or portfolio income)
• Which tools in the tax code will actually move your needle

Business owners often assume their CPA “looks at this already.” They don’t. Preparers report history. Strategists model the future. Until you know your true, projected tax bill, every tax move you make is just guessing.

Once the baseline is built, strategy becomes math instead of emotion and fear.

2. Clean Up Your Entity Structure Before the Year Ends

The cost of a poorly chosen entity compounds every year. The truth is, some owners should not be sole proprietors:

• They may need an S corp to reduce payroll tax.
• Some need a C corp for fringe benefit access.
• Other owners may need multiple LLCs to properly separate assets, income streams, and risk.

And for high-income families, sometimes the spouse shouldn’t work a W-2 job at all, especially when real estate or passive strategies could wipe out the household tax liability entirely.

You can’t fix entity structure on a tax return, but you can fix it before December 31.

3. Capture Deductions You’re Already Entitled To (But Probably Aren’t Using)

One of the biggest surprises business owners face when coming to Revo: Many of them are already doing things that could save enormous tax, but they just aren’t documenting, categorizing, or structuring them properly. For example:

• A business owner hosting monthly events at his home (already happening) uncovered $120,000+ in Augusta Rule deductions.
• A spouse managing rental properties unlocked $300,000+ in tax savings annually through a real estate professional strategy.
• A business owner using his home regularly for strategy sessions, planning, or training leveraged legitimate rental expenses instead of ignoring opportunities.

Tax law rewards what you’re already doing if you match it to the right section of the code. But those opportunities must be identified before the year closes.

4. Use Strategic Timing to Shift Income and Deductions

Timing is one of the simplest and most powerful tools business owners have. This has nothing to do with playing games; it’s using the exact incentives Congress intentionally put in the tax code.

Before December 31, you can:

• Prepay certain expenses
• Accelerate equipment purchases you were already planning
• Time income recognition
• Shift compensation to yourself in more tax-efficient ways
• Restructure the flow of money between related entities

If you wait until tax season? Every one of these doors slams shut.

5. Explore Passive or Hybrid Investments That Deliver Active Losses

This is where high-income business owners can make dramatic tax moves, but only if the investment is executed before year-end.

Working-interest oil and gas is one example. It’s one of the few investments in the entire tax code that allows you to take active losses against active income. That means you can legally cut your taxable income in half in the right situation.

Real estate is another example. If structured correctly and paired with material participation or a REP spouse, depreciation can wipe out entire income categories.

These strategies are legal, powerful, and time-sensitive.

6. Don’t Forget About Your Team: Payroll, Contractors & Retirement Plans

Year-end is the final chance to optimize your payroll and other overhead, including:

• How you compensate yourself
• Whether your contractors should be employees (or vice versa)
• Whether you’re using the right retirement plan for your income level
• Whether you should set up a defined benefit plan or cash-balance plan
• Whether payroll adjustments could reduce tax on distributions

These moves don’t work once the calendar turns. They rely on active decisions made before year-end.

7. Review Your Books Now, Not When Your CPA Is Drowning in Returns

You don’t need perfect books to plan your taxes, but you do need clean data.

A year-end review reveals things like:

• Missed deductions
• Misclassified transactions
• Expenses in the wrong buckets
• Equipment never placed in service
• Income not properly segmented between entities

Fixing these items now can open up strategies that disappear when filing season hits.

8. Audit-Proof Your Strategy Before the IRS Ever Asks

One of the big themes across tax season is fear, like the fear of audits, fear of red flags, fear of doing “too much.”

But the truth is simple: A defensible strategy is not scary. A disorganized one is. Audit-proofing looks like:

• Documentation
• Proper classification
• Following the Internal Revenue Code exactly as written
• Understanding original legislative intent
• Having a strategist who can run interference with the IRS

A good strategy should survive an audit without you ever speaking to an agent. This is possible. It’s routine. But only if the plan is set up correctly before year-end.

Final Word: Year-End Is When Business Owners Take Control

Business owners have more tax opportunities than anyone else in the tax code, but only if they act early. Before December 31, you can:

• Restructure your income.
• Reposition your spouse.
• Buy the right assets.
• Use investments that offset your active income.
• Restructure your entity.
• Maximize deductions you’re already eligible for.

But none of this happens in April. It happens now.

If you're a business owner who’s been told “it is what it is,” or “you’re already doing everything you can,” or “just be happy you’re making good money,” it’s time to get a second opinion.

Download the 2025 End-of-Year Tax Planning Checklist

Want the exact year-end moves our experts walk their business-owner clients through? The checklist is short, powerful, and built specifically for high-income earners.

Download the 2025 End-of-Year Tax Planning Checklist

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