Year-End Tax Moves Every S-Corp Owner Should Make Before December 31
- Aureus Advisory Partners
- Oct 23
- 5 min read
Updated: 7 days ago
If you own an S-Corporation, the decisions you make before December 31 could be the difference between a smart tax strategy and a surprise bill next spring. The good news is that you still have time to make moves that protect your profits, reduce your taxes, and set yourself up for a strong start next year.
Here’s a clear breakdown of what every S-Corp owner should focus on before year-end and how to make each move count.
1. Revisit Your Reasonable Salary and Owner Distributions
S-Corp owners wear two hats: shareholder and employee. That distinction matters at tax time.
You are required to pay yourself a reasonable salary through payroll for the services you perform. Anything above that can generally be taken as a distribution, which is not subject to self-employment tax.
If your salary is too low, the IRS can reclassify distributions and hit you with back taxes and penalties. Too high, and you pay unnecessary payroll tax.
Now is the time to check:
Have you paid yourself a fair, documented salary in 2025?
Are distributions properly tracked and separated from payroll?
Are payroll taxes up to date through Q4?
If you use Gusto, QuickBooks Payroll, or ADP, run your year-to-date payroll summary and verify your totals.
💡 Aureus Tip: Need to adjust before year-end? You can process a catch-up payroll to balance your salary for compliance before December 31.
2. Max Out Your Retirement Contributions
One of the easiest ways to reduce taxable income while building long-term wealth is through a Solo 401(k) or SEP IRA.
Employee deferral: Up to $23,000 in 2025 ($30,500 if you are 50 or older).
Employer contribution: Up to 25% of your W-2 wages, capped at a combined total of $69,000 ($76,500 if 50 or older).
The key is timing:
The plan must be set up by December 31 to be eligible for the year.
You can fund it later (up to your tax filing deadline, including extensions).
If you do not already have a Solo 401(k) or need help choosing a platform, check out our trusted partners through Rocket Dollar for flexible, advisor-backed plans.
💡 Aureus Tip: S-Corp owners can only contribute the employer match based on W-2 wages, so underpaying yourself means losing contribution room.
3. Review Your Books and Reconcile Everything
Before your CPA can build a strategy, your numbers need to be clean. That starts with reconciliation.
Check these areas:
Bank and credit card accounts
Loan balances and owner draws
Payroll taxes and 941 filings
Accounts receivable and accounts payable
If you use QuickBooks Online, run a Profit & Loss and Balance Sheet as of November 30 and look for red flags like negative balances or uncategorized expenses.
💡 Aureus Tip: If your books feel messy, do not wait until tax season. Our team uses Double and QuickBooks Online to get clients fully reconciled before year-end so you start January clean.
4. Prepay Strategic Expenses Before December 31
For cash-basis taxpayers (which most S-Corps are), expenses count when paid. That means prepaying qualified expenses before year-end can move deductions into 2025.
Common smart prepayments include:
January rent or utilities
Insurance renewals
Professional retainers (accounting, legal, advisory)
Software subscriptions and technology upgrades
Equipment and furniture purchases
💡 Aureus Tip: Every expense should serve next year’s goals. Do not spend to spend. Spend to strengthen.
5. Confirm You Have Made All Payroll Tax Deposits
If you have missed a payroll tax deposit, fix it now. Penalties for late payroll filings add up quickly and can create major headaches.
Run a Form 941 Summary for all four quarters and verify your deposits match what you owe.
Q1: Due April 30
Q2: Due July 31
Q3: Due October 31
Q4: Due January 31
💡 Aureus Tip: If you find errors, file an amended Form 941-X right away. The sooner you fix it, the less the IRS will penalize you.
6. Time Equipment Purchases with Section 179 and Bonus Depreciation
Under the new One Big Beautiful Bill Act, full expensing (100% bonus depreciation) remains available for most qualified assets such as equipment, computers, furniture, and vehicles used for business.
Section 179 allows you to deduct the full purchase price of eligible property placed in service by December 31, up to $1,220,000 for 2025.
💡 Aureus Tip: To qualify, the equipment must be in use before the year ends. Ordering it is not enough. Take delivery and start using it by December 31.
7. Review Estimated Taxes and Plan for Distributions
If you expect to owe a large balance, now is the time to plan for your final estimated tax payment (due January 15).
Distributions should always be made after you have:
Paid a reasonable salary.
Covered all business expenses.
Set aside cash for tax obligations.
💡 Aureus Tip: If your cash reserves are tight, coordinate with your CPA before taking year-end distributions. Pulling too much could hurt your business liquidity in Q1.
8. Clean Up Your Chart of Accounts
Your Chart of Accounts is the backbone of your books. A cluttered or outdated COA can cause misreporting and missed deductions.
At Aureus, we recommend every S-Corp review:
Expense categories for accuracy
Owner-related accounts (draws, loans, reimbursements)
Duplicate or unused accounts from old systems
💡 Aureus Tip: We have built a complete Accounting Firm COA Template that aligns with QuickBooks Online and makes cleanup simple. Schedule a consult if you would like our team to apply this to your file.
9. Check Your Shareholder Health Insurance and Fringe Benefits
If your S-Corp pays for your health insurance, it needs to be correctly included on your W-2 to claim the deduction.
Review these items before your final payroll:
Health insurance premiums
HSA contributions
Retirement contributions
Auto or home-office reimbursements
💡 Aureus Tip: These must be included properly in payroll to avoid losing deductions. Ask your payroll provider or CPA to confirm treatment.
10. Schedule a Year-End Strategy Review
The best time to fix tax issues is before December 31, not after your return is due.
A year-end strategy review can help you:
Balance your W-2 salary and distributions
Finalize retirement contributions
Identify missing deductions
Confirm compliance with payroll and tax filings
💡 Aureus Tip: This is where our advisory clients see the biggest savings. One hour of proactive planning can prevent thousands in taxes.
Final Takeaway
S-Corp tax planning is not about rushing to spend or scrambling for deductions. It is about understanding how your entity really works and using that knowledge to your advantage.
Before the year closes, take the time to align your salary, optimize your deductions, and position your business for a strong start to 2026.
You built your business with intention. Your tax strategy should have the same precision.
Ready to Take Action?
If you are ready to make these moves the right way, with real strategy behind every deduction, schedule a call with us HERE.
Or explore our favorite tools that make compliance simple: