Getting Ahead of Tax Season: How to Maximize Your End of Year Deductions

Tax season may seem far away, but the final quarter of the calendar year is an important time for businesses to begin preparing for April. While your final quarter may also be your busiest, you don’t have to do all of your tax planning at once. By taking a proactive approach by gathering the right information for filing, you can alleviate potential tax season stressors.

• Enact the 12×12 System: The US Chamber of Commerce coined the phrase to show how to prepare for tax season a little every month. Incorporating tax preparation into monthly financial check-ins helps eliminate any unwelcome surprises come April. This practice also keeps business documents better organized throughout the year.
• Modernize Your Recordkeeping: Business owners should maintain up-to-date recordkeeping systems that can fully support a variety of business needs. Today, many bookkeeping software programs can digitize paper receipts and invoices. Even with digital records, data security is important. Aim to back up data monthly, as the IRS requires businesses to retain records for at least three years.

Plan Ahead

As the end of the year approaches, here are some options business owners can consider ahead of tax season:

• Maximize Your Contributions: Review the maximum contribution amounts allowed for retirement plans. As a business owner, you can set up employee 401(k) plans, and qualified businesses can claim the cost of setting up and administering each plan. Additionally, contributing to health insurance premiums for employees, or yourself if you are self-employed, can help qualify for a deduction.
• Pay Down Debt: While you may have incurred debt to build your business this year, paying off some of it before the end of the year may be beneficial. A financial advisor can examine existing debt and identify the most tax efficient ways to pay it down.
• Upgrade Equipment: Business owners looking to upgrade equipment should consider completing purchases and disposing of older items before year-end. This strategy can help reduce tax burdens because the new assets will have minimal depreciation. If conserving cash flow is a concern, work with one of our Business Banking Associates to explore equipment financing or leasing options that may still allow for deductions, bonus depreciation, and other tax advantages.

Research Deductions, Credits, and Eligible Expenses

With the One Big Beautiful Bill Act came a new wave of deductions and credits that can help small businesses primarily by making key tax cuts from the 2017 Tax Cuts and Jobs Act permanent. These changes are intended to reduce tax burdens, increase cash flow, and encourage investment and job creation for small businesses. While much of this is designed for businesses in high cost of goods sold (COGS) sectors, there are still year-end options for small business owners of every kind.

• Energy‑Efficient Improvements and Clean Energy Credits: Upgrades like solar panels, LED lighting, or efficient HVAC systems may qualify for federal credits.
• Business Vehicle Expenses: Fuel, insurance, maintenance, and depreciation for business-use vehicles can also be deducted. The IRS allows the standard mileage rate or the actual expenses method (excluding commuting).
• Home Office or Business Use of Home: A portion of home expenses (mortgage, rent, utilities, insurance, etc.) may be deductible if the space is used regularly and exclusively for business.
• Professional Services: Fees paid to accountants, lawyers, consultants, or contractors directly tied to your business are generally considered deductible.
• Technology & Equipment: Computers, software, and other capital assets may qualify for Section 179 deductions or bonus depreciation.

Tax season doesn’t have to be daunting, which is why we recommend business owners consult with a tax professional. The WSFS Business Banking Team is here to help you with all of your financing needs. We also have resources available on our website for insight from our trusted advisors, whether you are just starting out or have become a community staple.