Year-End Tax Checklist for Small Businesses (2026)

The weeks before December 31 are your last chance to make some tax decisions for 2026. After that, you are mostly reporting what already happened. This year-end tax checklist covers the moves small business owners in the US most often review, plus key January dates for UK owners. It is general information, not tax advice, so confirm the details with an accountant or the official guidance.

Year-end tax planning is not about clever tricks. It is about making sure your records are complete, your deadlines are in the calendar and you have considered the few decisions that depend on timing. Most small business owners do not need to do anything dramatic. They need to check a list, talk to their accountant and avoid surprises.

Tax rules change often, and 2026 includes several changes from the One Big Beautiful Bill Act (OBBBA) in the US. Thresholds and limits below are as we understand them for 2026. Always check IRS.gov, GOV.UK, your state tax agency or a qualified accountant before acting, because your situation may differ.

Get your records in order first

Every tax decision depends on knowing where you stand. Before you think about deductions or timing, make sure your books are up to date through November and close to current for December.

1. Reconcile your accounts. Match every business bank account, credit card and payment processor balance to your books.
2. Run a year-to-date profit and loss. This shows your likely taxable profit and helps you and your accountant decide whether any timing moves make sense.
3. Organize receipts and mileage. Make sure expense receipts are attached or filed, and that your mileage log is complete if you claim vehicle use.
4. Plan your inventory count. If you hold stock, count it at or near year-end. Closing inventory affects your cost of goods sold and your taxable profit.
5. Separate personal and business spending. Flag any personal transactions that went through business accounts so they can be treated correctly.

Timing income and expenses (US)

If your business uses the cash method of accounting, you generally report income when you receive it and deduct expenses when you pay them. That can give you some flexibility around year-end.

• Deferring income. Some cash-basis businesses choose to invoice late-December work in early January so the payment lands in the next tax year. This only makes sense if it fits your cash flow and your expected tax rate.
• Accelerating expenses. Paying for genuine business expenses in December rather than January, such as supplies you need anyway, can bring the deduction into 2026.
• Watch the rules. There are limits on prepaying some expenses, and income you have the right to receive may still count. Accrual-basis businesses follow different rules.

Timing moves shift tax between years. They do not make it disappear. If you expect higher income in 2027, deferring income could cost you more overall. Ask your accountant to compare both years.

Equipment purchases and Section 179 (US)

If you were already planning to buy equipment, machinery, computers or certain software, year-end timing matters. Under Section 179, as updated by the OBBBA, you may be able to deduct the full cost of qualifying property in the year it is placed in service rather than depreciating it over several years.

A few points matter for year-end:

• Placed in service by December 31. The equipment must be bought and ready for use in your business by December 31 to count for 2026. Ordering it is not enough.
• Limited to business taxable income. The Section 179 deduction cannot exceed your business taxable income. Any excess generally carries forward.
• Bonus depreciation. 100% bonus depreciation is available for qualifying property acquired after January 19, 2025, which can also allow a full first-year deduction.
• Vehicles have separate limits. SUVs and some other vehicles have lower, specific limits. Check before you assume a vehicle is fully deductible.

Contractors, W-9s and 1099s (US)

If you pay freelancers or other contractors, December is the time to make sure January reporting will be smooth.

• Collect Form W-9 from every contractor. Ideally you collect it before the first payment. If any are missing, request them now, before people go on holiday.
• Total payments per contractor. Run a report of 2026 payments to each contractor and check names, addresses and taxpayer numbers.
• Know the new threshold. For payments made in 2026 onward, the 1099-NEC and most 1099-MISC reporting threshold rises from $600 to $2,000.
• Diarize January 31. Forms W-2 for employees and 1099-NEC for non-employees are due to recipients and to the SSA or IRS by January 31.

Late or incorrect forms can bring penalties, so give yourself enough time in January to prepare and check them.

Payment platform income

If you sell through marketplaces or take payments through processors, you may receive a Form 1099-K. The threshold is $20,000 and more than 200 transactions. Whether or not you receive any form, all business income is taxable and must be reported.

Retirement plans and owner pay (US)

Retirement contributions are one of the most common year-end planning topics for self-employed people and small business owners.

• Solo 401(k). If you want to make employee deferrals for 2026, a Solo 401(k) generally must be set up by December 31, 2026.
• SEP-IRA. A SEP-IRA can be opened and funded until your tax filing deadline, including extensions, so it is less time-sensitive.
• Owner salary. If you run an S corporation, review whether the salary you paid yourself during 2026 is reasonable and that payroll filings are up to date.

Contribution limits and eligibility rules vary by plan type and income. Check current limits on IRS.gov or with your plan provider.

Employees, bonuses and gifts (US)

Many businesses pay year-end bonuses or give holiday gifts. Plan the tax side before you do.

• Bonuses are wages. They are taxable as supplemental wages. Federal income tax withholding can use a flat 22% rate, plus Social Security and Medicare.
• Cash and gift cards are taxable. Gift cards given to employees count as wages, even small ones.
• Small non-cash gifts. Occasional low-value items, like a holiday turkey, can be a tax-free de minimis fringe benefit.
• Holiday parties. A party or similar recreational event primarily for employees, not just highly paid ones, is generally 100% deductible, an exception to the 50% meals limit.

Charitable giving (US)

The OBBBA changed how charitable deductions work from 2026. C corporations can deduct charitable gifts only above a floor of 1% of taxable income, still capped at 10%. For sole proprietors, LLCs and S corporations, donations usually pass through to the owner's personal return, where individuals who itemize face a 0.5% of AGI floor. People who take the standard deduction can deduct up to $1,000 ($2,000 for joint filers) of cash gifts to qualifying public charities, not donor-advised funds.

Get written acknowledgment from the charity for any gift of $250 or more, and make sure gifts you want to count for 2026 are made by December 31.

Estimated taxes and the January 15 payment (US)

If you pay estimated taxes, the fourth-quarter 2026 payment on Form 1040-ES is due January 15, 2027. Review your year-to-date profit now to see whether your payments are on track.

The safe harbor rules generally help you avoid an underpayment penalty if, through withholding and timely estimates, you pay 100% of last year's tax (110% if your prior-year AGI was over $150,000) or 90% of this year's tax.

UK owners: January deadlines to plan for

If you are a UK sole trader, partner or company director who files Self Assessment, the main deadline is 31 January 2027. On that date the balancing payment for 2025/26 and the first payment on account for 2026/27 are due.

• Plan the cash now. January bills can be large, especially if payments on account apply for the first time.
• Pay through PAYE. If you owe less than £3,000, are employed or get a pension, and file online by 30 December, you may be able to have the tax collected through your tax code.
• Payment options. You can pay by online or telephone banking, by debit card (personal credit cards are not accepted) or by Direct Debit if set up in advance.
• If you cannot pay in full. You may be able to set up a Time to Pay arrangement online, generally if you owe £30,000 or less and meet the conditions. Interest and penalties apply to late payment.

Christmas parties and staff gifts also have specific UK rules, including the £150 per head annual event exemption and the trivial benefits rules. Check GOV.UK before you plan them.

Frequently asked questions

The bottom line

A good year-end tax review is mostly about records, timing and deadlines. Get your books current, look at your likely profit, consider equipment purchases, retirement plans and charitable gifts that must happen by December 31, and prepare for the January 15 and January 31 deadlines.

Rules and thresholds change, especially in a year with new legislation. Treat this list as a starting point, check IRS.gov, GOV.UK or your state tax agency, and book a short call with your accountant in December rather than in late January.