Heading into tax season unprepared can be costly—missed deductions, lost paperwork, and sometimes, a surprise check to the IRS. But it doesn’t have to be that way! In this episode, Danielle Hayden, reformed corporate CFO and founder of Kickstart Accounting, Inc., shares the ultimate year-end checklist every business owner needs to save on taxes, protect their business, and walk confidently into tax season.
From organizing your paperwork to making smart tax moves and maximizing personal financial strategies, Danielle gives you practical steps you can take before December 31st that can make a big difference in the new year.
Key Takeaways:
- Get Your Paperwork in Order: Before December 31st, ensure all your partnership agreements, legal documents, and W9s are signed, stored, and ready. It’ll save you major headaches during tax season.
- Use the January 1st Advantage: The first of the year is the best time to make big structural changes, like starting an LLC, switching payroll providers, or filing for S Corp status. This avoids partial-year filings and confusion.
- Pay Your Kids (Properly!): You can pay your children for legitimate work in your business and enjoy tax advantages while teaching them financial responsibility.
- Take Advantage of Accountable Plans: Reimburse yourself consistently for things like your home office and cell phone. It’s an important benefit that shouldn’t be skipped, even in slower years.
- Review Personal Tax Opportunities: Before year-end, check your 529 plans, HSA, and FSA balances and make contributions to maximize your deductions and savings.
- Max Out Retirement Contributions: Don’t forget to fund your retirement plan! Whether it’s a 401(k), SEP IRA, or solo 401(k), you’re building wealth beyond your business.
- Meet with Your Tax Accountant Early: Schedule a pre-tax-season check-in to confirm your estimated payments, review your strategy, and avoid surprise penalties.
- Don’t Spend Money Just to Save on Taxes: Avoid the trap of prepaying expenses or buying things you don’t need. Focus on building a healthy, sustainable, profitable business instead.
Topics Discussed:
(00:00) Intro + Critical Paperwork to Get In Order for Year-End
(02:24) Setting Up or Switching Your Business Structure for 1/1: LLC, Payroll, S Corp Election
(05:02) Paying Your Kids the Correct Way for Tax Benefits
(06:36) Accountable Plan Reimbursements
(07:24) Collecting W9s from Contractors
(08:13) Personal Tax Strategies: 529 Plans, HSAs, FSAs, and Health Insurance
(11:13) Retirement Contributions and Your Different Options
(12:31) Meeting with Your Tax Accountant
(13:28) Smart Tax Planning Strategies to Avoid IRS Penalties and Spending Profit When You Don’t Need To
(15:36) Itemized Deductions, Charitable Contributions, and the Big Beautiful Bill’s Effect on Depreciating Equipment
(17:17) Outro: Kickstart’s Free Year-End Tax Checklist, Like, Share and Subscribe!
Resources:
Free Download | Ultimate Year-End Tax Checklist
Related Episodes:
- Entrepreneurs: Should You Go S-Corp? Pros & Cons + Expert Insight – Ep 115
- Can You Legally Hire Your Children?: How to Pay Your Kids, Get Tax Advantages, & Create Generational Wealth – Ep 137
- Beyond the Business: Preparing for a Secure Retirement – Ep 188
KSA Tax Partners | https://ksataxpartners.com/
Book a Call with Kickstart Accounting, Inc.:
https://kickstartaccountinginc.com/book-a-call/
Connect with Kickstart Accounting, Inc.:
Instagram | https://www.instagram.com/Kickstartaccounting
YouTube | https://www.youtube.com/@businessbythebooks
Facebook | https://www.facebook.com/kickstartaccountinginc
Episode Transcript
00;00;00;00 - 00;00;33;13
Danielle Hayden
Heading into tax season unprepared, scrambling for paperwork, missing deductions or worse: writing a huge check to the IRS because there wasn't a plan can be costly. Overpaying taxes isn't just frustrating, it's money you could have reinvested in your business or your future. In this episode, I'm giving you the ultimate year-end checklist every business owner needs. You'll know exactly what steps to take now to save on taxes, protect your business, and walk into tax season feeling confident instead of stressed.
00;00;33;16 - 00;00;55;17
Danielle Hayden
You're listening to Business by The Books, the podcast helps you, the business owner, understand your numbers and make strong financial decisions. I'm Danielle Hayden, CEO of Kickstart Accounting, Inc., and I've walked thousands of entrepreneurs through this process, and today, I'm going to do the same for you. Here's what we'll cover: the critical paperwork you need in order before December 31st,
00;00;55;17 - 00;01;20;29
Danielle Hayden
the smart year-end tax moves, like S Corp elections, paying your kids, and accountable plan reimbursements; the personal tax strategies you need to address; 529s, HSAs, FSAs, all the acronyms; a hot take opinion on why you should never spend money just to save money on taxes, and the one meeting you need to book before the year ends to avoid penalties and surprises.
00;01;20;29 - 00;01;45;06
Danielle Hayden
I'm going to jump right in. We have a long list today. You can also download this checklist with the current year limits at KickstartAccountingInc.com/YearEnd. So again, KickstartAccountingInc.com/YearEnd. Download this checklist with all of the limits. First and foremost, I want you to put all of your paperwork in order.
00;01;45;13 - 00;02;14;02
Danielle Hayden
I know this feels like one you can roll your eyes, “Of course the CPA wants the paperwork,” but you guys, here at KSA Tax Partners, we require our clients to provide us with documentation. We have seen in the past, “he said she said” partnership agreements and this needs to be in writing, preferably from your attorney, signed documents of any business agreements that you have.
00;02;14;04 - 00;02;39;21
Danielle Hayden
Your CPA should be requiring this information at the time of tax filing. So right now, as you're preparing for year-end, I want you to get these documents ready. Next, if you are considering starting a second LLC, maybe a third LLC--I see you entrepreneurs--or dissolving any entities that are no longer being used, January 1st is the best time to do this.
00;02;39;23 - 00;03;14;00
Danielle Hayden
I don't want you to have to file and pay for a partial tax return. So if there's any businesses that you're dissolving or any businesses that you're creating, 1/1 is the best time to do that. I'll also say that January is the best time to change payroll providers. So if you are considering making a switch from your current payroll provider to, let's say, Gusto, this 1/1 pay period is going to be the best time to do it so that your current payroll provider can file all the year-end tax reports and pay everything on your behalf.
00;03;14;00 - 00;03;35;11
Danielle Hayden
And then you can start fresh with your new payroll provider moving forward. Next, if you've been thinking about becoming an S Corp, this is a major milestone as a business owner, and right now is the time to file your S Corp paperwork with a start date of 1/1. The benefit of doing this paperwork at this point, you can send it into the IRS.
00;03;35;11 - 00;03;56;02
Danielle Hayden
It can be approved. You can work with your money team here at Kickstart Accounting Inc. We have a payroll department where we can set up your payroll for you. So if you are thinking about becoming an S Corp, get that paperwork in right now so that your money team can set up payroll for you. That way you are ready to start paying your reasonable compensation
00;03;56;02 - 00;04;20;05
Danielle Hayden
payroll starting 1/1. You know what I see happen too often with clients? That they think about becoming an S Corp, and if you're anything like me, I'm not good at those types of details and admin tasks and so I wait, and then our clients file this paperwork March, April, May. And the problem is that as a S Corp, you have to pay yourself a reasonable compensation.
00;04;20;05 - 00;04;39;00
Danielle Hayden
Remember this is an IRS rule, not a Danielle, not a Kickstart Accounting, not a KSA tax partners. The IRS requires you to pay yourself a reasonable compensation. And so if you are not filing this as core paperwork until summer, we have some payroll to make up, or we'll need to put your draws through payroll to pay that payroll tax on it.
00;04;39;03 - 00;04;56;28
Danielle Hayden
So if you're thinking about becoming an S Corp, this is the best time to do it. Let's get your payroll set up and let's get you paid as of 1/1. So who should become and S Corp? I'm going to link a podcast episode below, so if you are not sure of becoming an S Corp is the best strategy for you,
00;04;56;28 - 00;05;23;01
Danielle Hayden
that podcast episode will be linked below so that you can go and do further research. Our next strategy in preparing for year-end is to pay your kids. Now again, we've done a full episode on whether or not you should be paying your kids in your business. I'm going to link that full episode below. However, if you are an LLC, you can pay your kids up to $15,000 tax free.
00;05;23;01 - 00;05;45;27
Danielle Hayden
Not paying that like a tax. I want to be clear about our guidance here at KSA Tax Partners: If you are going to be paying your children, they need to be doing legitimate tasks in your business and that time should be tracked and you should have real, actual tasks that they're performing for you and your business. So in my opinion, this isn't a tax strategy,
00;05;45;27 - 00;06;10;05
Danielle Hayden
this is a business strategy. This is something that I've enjoyed implementing as a mother. I love giving my kids responsibility and teaching them that responsibility and teaching them how to manage money. So if you have children, you can pay them tax free as an LLC only if they're doing legitimate business tasks. Now, if you're an S Corp, you can still pay your kids.
00;06;10;07 - 00;06;36;01
Danielle Hayden
However, they're going to be on payroll and you're going to be paying payroll tax. Again, this is more than just a tax saving strategy. This is a strategy about being able to show our kids what entrepreneurship is. So even though you're paying payroll tax, it's a great opportunity for your children and it's still a tax deduction. So it'll be lowering your net income and therefore lowering your tax liability.
00;06;36;01 - 00;07;01;26
Danielle Hayden
Our next strategy is to make our accountable plan reimbursements, because it's really important to be consistent every single year, even during a time of a business loss. If you are currently an S Corp, you should have an accountable plan in place. This accountable plan allows you to reimburse yourself for things like your home office, your cell phone, any of those personal expenses.
00;07;01;28 - 00;07;24;26
Danielle Hayden
I want you to be reimbursed throughout the year because that is the benefit of being an S Corp. That's the benefit of an accountable plan, you guys. And even if your business is having a slower season or a down year, it's really important to prioritize being consistent. And from a tax perspective, you'll be able to carry those losses forward.
00;07;24;28 - 00;07;53;22
Danielle Hayden
Next is to collect W9s from contractors because anybody that you are going to be paying over $600 this year, you need to have a W9 now. Please do not wait. We jump into 1099 season in January, and I can't tell you how many clients have had issues collecting W9s from contractors once the engagement has completed or maybe the relationship even went south.
00;07;53;22 - 00;08;16;17
Danielle Hayden
So as a general business practice, I really want you to collect the W9 before you ever pay anybody any money. However, if you forgot and you went ahead and engaged with contractors this year, if you are close to paying them $600 at this point, we're going to go ahead and collect a W9 from those contractors. Let's move into some personal tax strategies.
00;08;16;19 - 00;08;49;08
Danielle Hayden
First, we have our 529 plan. Now we have an opportunity as parents to be able to contribute to a 529 plan each year. Now I want to be clear these amounts vary by the state. And so it's really important to do the research and talk to your tax account about 529 plans in your specific state. However, as a general tax strategy, this is the time to ensure before year-end that we have contributed our max to our 529 plans for our children.
00;08;49;10 - 00;09;18;06
Danielle Hayden
Now, as a business and for you personally, we need to review our health insurance renewal. I know that this is something that we do here at Kickstart Accounting very early. We start this process in September. We offer open enrollment to our employees every year where they have the opportunity to review their health insurance. But we, as a business, have to consider what we are offering and how we plan on renewing our health insurance.
00;09;18;08 - 00;09;42;07
Danielle Hayden
And so you as a business owner, need to review what you're going to be offering your business, yourself and your employees. And then from a personal standpoint, do you have the right health insurance plan for you personally? If you have a high deductible plan, you can contribute to your HSA and this can be a great tax strategy. Now in our guide, we'll have the limits for this year.
00;09;42;09 - 00;10;17;19
Danielle Hayden
However, what I want you to focus on right now in terms of this checklist is have you contributed to the HSA plan personally and as part of your cash management and tax strategy, are you able to fully contribute to your HSA for this year? Now, these dollars don't have to be used by the end of the year. When you have a high deductible plan and you have an HSA, those dollars roll from year to year in an investment account, and this can be a great wealth building strategy personally and as a business owner.
00;10;17;25 - 00;10;41;15
Danielle Hayden
So don't overlook this opportunity to fully fund your HSA before the end of the year. Now, if you don't have a high deductible plan, you may still have an FSA. Now, it's really important that, as we are rounding out this year, that you check your FSA balances. Now, not all FSA plans even permit a carry over of the unused dollars.
00;10;41;17 - 00;11;02;27
Danielle Hayden
So if you have an FSA in your business, or maybe you have a spouse who has an FSA at their employer, double check your balances right now to see if you want to continue to contribute to that balance and ensure that you're using those dollars, because there's only a small amount that can be carried over year over year.
00;11;03;01 - 00;11;24;27
Danielle Hayden
And there might be some limitations based on the actual FSA plan. So the to-do item here is to go check your FSA balance and use those dollars before the end of the year. Next is our retirement. I am going to link the full podcast episode that we did on retirement in the show notes, and we'll also have a chart in our guide.
00;11;25;00 - 00;11;49;06
Danielle Hayden
However, what I want you to walk away from in this podcast episode is that whether you have a 401(k), a solo 401(k), a SEP IRA, a defined benefit plan, a simple IRA, or a traditional 401(k), right? We have all of the options here as a business owner. So whatever your option that you have implemented with your financial advisor.
00;11;49;09 - 00;12;13;28
Danielle Hayden
But I want you to take away as an action item right now, is to ensure that you are fully contributing. I've heard from so many other business owners that we are always tempted to take every single dollar and profit that we make and reinvest those dollars back into the business, and while I honor that and I love how, as visionaries, we are love with this business,
00;12;13;28 - 00;12;44;24
Danielle Hayden
however, it is important that we are looking at our financial picture holistically with our financial advisor. And so your action item here is to implement a retirement solution and then utilize it by maximizing your contributions year over year. All right, our next strategy is to meet with your tax accountant. I know it's not tax time yet, however, here at KSA Tax Partners, we do an annual off-season check-in so that we can meet with our clients.
00;12;44;24 - 00;13;08;14
Danielle Hayden
Understand what you have going on personally, outside of the business, ensure that we are paying enough in estimated taxes and we have enough saved in taxes for year-end. You know, one of the best strategies that we can use to put money back in our pocket is just cutting out the late penalties and interest paid to the IRS.
00;13;08;16 - 00;13;43;04
Danielle Hayden
Ugh, is it painful to see those dollars that we're paying in penalties, fees and interest. So meet with your tax account during this annual check-in season to ensure that you've paid enough in estimated tax payments, and that you have enough in savings or reserve so that you are ready for tax season. One of my number one pet peeves for the tax industry is when I hear CPAs say to clients during this last quarter of the year, you have a profit, go spend money and reduce your profit.
00;13;43;07 - 00;14;14;00
Danielle Hayden
And I am here to shout from the rooftops, please do not go spend money just to save money on taxes. You do not need to prepay expenses. Be consistent. If you're prepaying expenses for next year, all you're doing is shifting those expenses from one year to another. And I don't know about you, but for me as a business owner, what's my biggest priority is to see how my business is actually performing.
00;14;14;02 - 00;14;40;07
Danielle Hayden
I don't want to cloud that with tax strategies that honestly really aren't saving me any money. I'm just shifting expenses from one year to another. So if I'm going to go to a conference next year and it's not until next summer, honestly, probably going to wait and pay for it then. If I have rent or insurance, I'm going to pay for it when it's due, because that's an effective cash management strategy for me.
00;14;40;07 - 00;15;03;26
Danielle Hayden
I don't want to prepay expenses just to save money on my tax return. I really want to wait as a cash management have those dollars in my high interest savings account building interest, and then I'm going to pay those expenses when the time is due. So overall, I want you to be consistent. You don't have to move dollars around because you're profitable this year.
00;15;03;28 - 00;15;30;02
Danielle Hayden
Be here, be in this moment. If you are creating a healthy, sustainable, profitable business, I want you to own that because when you go to sell your business, look for investors, take on a loan, buy a new property, both personally or for the business, you're going to have the profits to show that you are a legitimate business, to show that you have the profitability to take on debt and effectively pay them back.
00;15;30;02 - 00;15;58;23
Danielle Hayden
We do not need to play a tax strategy that's really going to hurt the long-term health of our business. If you are currently itemizing on your return, this would also be a great time for charitable contributions. Now this has changed over the years. Charitable contributions has really taken a hit because the standard deduction has increased. We're not able to take all those charitable contributions unless we're itemizing our deductions.
00;15;58;25 - 00;16;26;27
Danielle Hayden
So if you have previously itemized your deductions or you anticipate to be itemizing your deductions again this year, charitable contributions will be a great tax strategy to implement at this point in the year. Now, I don't want to blow past the fact that the Big, Beautiful Bill has changed how we're able to depreciate equipment. Now, for most of our clients here at Kickstart Accounting and KSA Tax Partners, we work with a lot of online business owners,
00;16;26;27 - 00;17;03;22
Danielle Hayden
however, if you are purchasing equipment, the bill has restored the 100% of bonus depreciation. This is the cost of the equipment for our short lived assets. Think equipment, machinery, business vehicles, hardware purchases. Now we're able to take 100% bonus depreciation in the first year. Now for most of our clients, I don't think that we've been waiting for bonus depreciation to come back into effect in order to make equipment purchases, because we here, are not playing a game of tax strategy.
00;17;03;24 - 00;17;26;29
Danielle Hayden
We are building healthy, sustainable, profitable businesses. And that means when your business needs equipment, you purchase the equipment because we need that equipment in place in order to create the business of our dreams. I know that this was a big, heavy podcast episode with a lot of strategies. Not all of these are going to be a strategy for you.
00;17;27;01 - 00;17;48;17
Danielle Hayden
You don't have to implement every single one of these. However, I want you to download this checklist. Go to KickstartAccountingInc.com/YearEnd and work your way through the checklist to make sure that if this strategy applies for you, that you have done your research and that you are hitting those limits before the end of the year. We are here for you.
00;17;48;18 - 00;18;12;12
Danielle Hayden
If you have any questions or you need a money team, bookkeeper, CFO, or tax strategist, I want you to go to KickstartAccountingInc.com and book a call with our team. We are so excited to be of service to you and your business. I'll see you back here next week. I hope you enjoyed today's episode of Business by The Books.
00;18;12;12 - 00;18;57;29
Danielle Hayden
Don't forget to hit like and subscribe! This is the number one way we can help other entrepreneurs find this podcast, because here at Kickstart Accounting, Inc., it is our mission to help entrepreneurs understand their numbers, get access to this information, and grow and thrive in their business. So please help me, help other entrepreneurs understand their numbers so they can finally grow and thrive.