Year-End Business Checklist and Snowshoe Hares
In this edition of the Flying Point Update we're going to talk about the holiday whirlwind, year-end business planning strategies, and snowshoe hares.
Top of Mind
December always seems to play out the same way. In our heads, we imagine cozy holiday gatherings, leisurely mornings with family, and winding down the year at a comfortable pace. Then reality hits, and December is anything but relaxing.
Between school events, gift shopping, hosting family, managing work deadlines, and trying to close out business operations for the year, it feels like we're sprinting toward the finish line rather than gently strolling. The kids are bouncing off the walls with holiday excitement, clients need attention before everyone disappears for vacation, and that nagging list of year-end business tasks keeps getting longer.
This is where work-life balance gets particularly tricky for business owners. Unlike W-2 employees who might slow down in December, we're often dealing with intensified activity. There are vendor payments to settle, client relationships to maintain, books to reconcile, and strategic decisions about retirement contributions or equipment purchases that need to happen before December 31st. Plus, unlike April tax deadlines that can be extended, December 31st is a hard stop for anything that impacts your 2025 tax return.
The challenge is that these business tasks aren't optional. They genuinely matter for your 2025 taxes and your 2026 financial health. But they're competing with all those other December demands that also genuinely matter. There's no perfect answer here, just the acknowledgment that if you're feeling overwhelmed by everything December throws at you, you're not alone.
What helps is breaking things down into concrete, manageable actions. Rather than feeling generally stressed about "year-end business stuff," having a specific checklist makes it possible to tackle things systematically. So let's walk through some of the key items that small businesses should address before the calendar flips to 2026.
But, before we dive in, I recognize that it’s easy to tell other business owners what they should do at year end. In case you’re wondering, I still need to do just about everything on this list for my own business. We also haven’t gotten a Christmas tree yet…
Worth Knowing
Here are some concrete year-end moves worth considering for small businesses. This isn't exhaustive, and not everything will apply to your situation, but it's a solid starting point for what to focus on in the next few weeks:
QuickBooks Reconciliation: If your books have gotten messy during the year, now's the time to clean them up. Reconcile all bank accounts and credit cards through December. This isn't just about tax preparation - it's about knowing where you actually stand financially going into 2026. Catching errors now is infinitely easier than fixing them in March.
S-Corp Reasonable Compensation and Fringe Benefits: If you're an S-Corp owner, make sure your W-2 wages are reasonable for your industry and role. The IRS pays attention to this, and getting it wrong creates audit risk. If you've had a strong year and your salary hasn't kept pace with distributions, you might need to run additional payroll before year-end.
Also review how fringe benefits like health insurance are being reported. If you're taking the self-employed health insurance deduction, those premiums need to be included in your W-2 wages and then deducted on your personal return. Verify everything is set up properly before W-2s get issued in January.
Retirement Plan Contributions: Business retirement plans like SEP-IRAs, SIMPLE IRAs, and Solo 401(k)s have different deadlines. Some require funding by December 31st, while others can wait until you file your tax return. Know which type of plan you have and what your deadline is. These contributions are powerful tax deductions, but missing the deadline means missing the deduction for 2025.
Equipment Purchases and Section 179: If you've been considering business equipment purchases, the Section 179 deduction allows you to write off up to $2.5 million in qualifying equipment in 2025 if it's purchased and placed in service by December 31st. This includes vehicles, computers, furniture, and machinery. Just make sure you actually need the equipment - don't buy things you don't need just for a tax deduction.
Estimated Tax Review: Look at your estimated tax payments for the year. If you've underpaid, you still have time to make a catch-up payment to avoid underpayment penalties. Remember the safe harbor rule: if you've paid at least 100% of your prior year's tax liability (110% if your income exceeded $150,000), you're protected from penalties.
1099 Vendor Review: This one never gets done in advance and always becomes a January scramble. Take 30 minutes now to review your vendor list for anyone you paid $600 or more during the year for services. Make sure you have current W-9 forms with correct addresses and tax ID numbers. Verify whether vendors are incorporated (which may exempt them from 1099 reporting). Doing this now, before the January 31st deadline, will save you significant stress and help you avoid penalties for late or incorrect filings.
Accounts Payable and Receivable: Take time to review outstanding invoices and bills. For cash-basis taxpayers, expenses are deductible when paid and income is taxable when received, making year-end a good time to clean things up.
Be careful about playing timing games purely for tax purposes. The IRS doctrine of "constructive receipt" means income is taxable when it's made available to you, whether or not you choose to deposit it. Make business decisions based on sound business reasons, then understand the tax consequences. Don't let the tax tail wag the business dog.
Inventory for Product-Based Businesses: If you sell physical products, year-end inventory counts matter for cost of goods sold calculations. An accurate physical count helps with both tax reporting and understanding your business health. Write off any obsolete or damaged inventory to reduce taxable income.
Bonus and Wage Payments: If you're planning to pay employee bonuses, timing matters. For accrual-basis businesses, bonuses generally need to be paid within 2.5 months of year-end (by March 15th) to deduct them on your 2025 return. For cash-basis businesses, bonuses need to be paid by December 31st to count for 2025.
The key point is that year-end planning isn't about doing all of these things - it's about understanding which ones matter for your specific situation. Don't wait until December 28th to think about this stuff.
Mark Your Calendar
January 15th, 2026: Q4 2025 estimated tax payments due
January 31st, 2026: Deadline to issue W-2s and 1099s to employees and contractors. This is also the final day to submit copies to the IRS. This deadline sneaks up fast, especially with the holidays. If you haven't reviewed your 1099 vendor list yet, do it now while you still have breathing room.
April 15th, 2026: Tax filing deadline for sole proprietorships, single-member LLCs, and C-corporations following a calendar year
Maine Wildlife Facts
It's been a quiet two weeks for wildlife encounters around our house, so I told Will and Frank they could pick any Maine animal they wanted for this newsletter. The boys decided on snowshoe hares. They've determined that Catherine's (their almost 2 year old sister) favorite animal is a bunny, though I'm sure she'll have her own thoughts on the matter as she gets older.
While many people think of cottontail rabbits, cottontails are actually fairly rare in Maine. What we have instead are snowshoe hares, named for their oversized hind feet that act like natural snowshoes. But their most impressive feature is their seasonal coat change. In summer, snowshoe hares are rusty brown. As winter approaches and daylight decreases, they molt into a brilliant white coat for camouflage against snow. The entire transformation takes about ten weeks and is triggered by changing day length, not temperature.
Snowshoe hares are surprisingly large, weighing 3-4 pounds and measuring up to 20 inches long. They're active at dawn and dusk, and unlike rabbits, they don't dig burrows. Instead, they rest in shallow depressions under brush or fallen logs. When threatened, they can run up to 27 miles per hour and leap 10 feet in a single bound.
Will and Frank were both delighted to learn that snowshoe hares eat some of their own droppings to extract maximum nutrition from their diet of twigs, bark, and vegetation. It's a clever adaptation that allows them to survive harsh Maine winters on relatively poor-quality food. Of course two boys would fixate on this…
These Maine wildlife facts have been brought to you by Will (7) and Frank (3), Flying Point Advisors' on-staff naturalists.
Questions about any of this? Just reach out - I read every email and love hearing from you. Thanks for reading. You'll hear from me again in about two weeks.
-Mike
Disclaimer
The Flying Point Update is provided for general educational and informational purposes only. The content in this newsletter reflects my thoughts and observations on tax, accounting, and financial planning topics, but should not be considered personalized tax, accounting, or investment advice for your specific situation.
Tax laws are complex and change frequently. The information presented here is based on current tax law as of the publication date and represents general concepts that may not apply to your circumstances. Every individual and business has unique factors that affect their optimal tax and financial planning strategies.
Before making any financial decisions or implementing any tax strategies discussed in this newsletter, please consult with a qualified tax professional, CPA, or financial advisor who can evaluate your specific situation. If you'd like to discuss how any of these topics might apply to your circumstances, I'm always happy to chat.