Every October, I start getting the same concerned calls.
“Am I going to owe taxes?”
“Am I missing deductions?”
“Is there still time to do something before year-end?”
The good news is that October is not too late. In fact, Q4 is one of the most important times to review your numbers and identify tax-planning opportunities before December 31.
Here are five of the most common questions business owners are asking me right now.
Q1: “How do I know if I’m going to owe taxes?”
This is exactly why a Q4 tax checkup matters.
A good starting point is to review your year-to-date net profit, estimated deductions, estimated tax liability, and the tax payments you’ve already made.
For example:
YTD Net Profit: $120,000
Estimated Deductions: $30,000
Estimated Income After Deductions: $90,000
Illustrative Estimated Tax at 28%: $25,200
Estimated Payments Already Made: $15,000
Potential Shortfall: $10,200
This is only a simplified illustration. Your actual taxable income and tax liability depend on your full tax situation, including filing status, business structure, other income, credits, and applicable taxes.
Q4 Action Step: Pull your current Profit & Loss statement and review your year-to-date numbers with your tax professional. The earlier you identify a potential shortfall, the more time you have to plan.
Q2: “What about clients who haven’t paid me yet? Does that count as income?”
It depends on your accounting method.
With the cash method, income is generally recognized when you actually or constructively receive it.
With the accrual method, income is generally recognized when it is earned, even if the customer has not paid yet.
This distinction can make a big difference when reviewing your year-end income.
For cash-basis businesses, the timing of legitimate billing and collections can sometimes affect which tax year income falls into. However, simply delaying access to money that is already available to you may not defer the income because of constructive-receipt rules.
Q4 Action Step: Before making decisions about the timing of income or collections, talk with your tax professional about what is appropriate for your accounting method and circumstances.
Q3: “Should I spend money just to lower my tax bill?”
No. A tax deduction doesn’t make an unnecessary purchase a good business decision.
Instead, ask yourself:
“Is this something my business already needs, and does it make financial sense to purchase it before year-end?”
For example, if your business already planned to purchase equipment next year, it may be worth discussing whether purchasing and placing it in service before year-end could provide a tax benefit.
The key is simple:
Don’t spend money just for a deduction. Make necessary business purchases strategically.
Q4: “What deductions could I be overlooking?”
There isn’t one deduction that applies to every business, but several areas are worth reviewing.
Retirement Contributions: Depending on the type of retirement plan and your situation, business owners may be able to make deductible retirement contributions. SEP IRA contribution calculations and limits depend on factors such as compensation and self-employment income.
Business Mileage: Keep accurate records of qualified business miles. For 2026, the IRS standard business mileage rate is 72.5¢ per mile from January 1 through June 30 and 76¢ per mile from July 1 through December 31.
Self-Employed Health Insurance: Eligible self-employed individuals may be able to deduct qualifying health insurance premiums for themselves, their spouse, and dependents, subject to applicable rules and limitations.
Q4 Action Step: Review these areas with your tax professional now instead of discovering missed opportunities when your return is being prepared.
Q5: “When should I start year-end tax planning?”
Right now.
Waiting until January can mean losing access to strategies that needed to be completed before year-end.
Think of Q4 this way:
October: Review your books, income, expenses, and estimated tax position.
November: Decide which appropriate strategies need to be implemented, such as retirement planning, payroll adjustments, or necessary business purchases.
December: Complete applicable year-end actions and make sure your documentation is organized.
January: Start preparing for filing season with cleaner books and fewer surprises.
Don’t Wait Until Tax Season to Find Out Where You Stand
A Q4 tax health check is about more than lowering taxes. It’s about understanding your numbers, avoiding unnecessary surprises, and making informed decisions while you still have time to act.
Not sure where your business stands heading into year-end?
Reply to this email and let’s review your numbers together. A conversation now could make your year-end planning much easier.
R.S.K. Tax & Consulting, LLC
Helping business owners plan ahead, stay organized, and make informed tax decisions.
