Episode 74: How to Prepare Your Business for Tax Season Before December Ends

Welcome to the creative mind smart money podcast, where we turn financial confusion into creative confidence. I’m Samantha Eck, bookkeeper and fractional CFO for creative entrepreneurs. Each week, I’m sharing my financial expertise and actionable strategies to help you build a thriving creative business.

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You’re listening to the creative minds smart money podcast. And today, like we did last year, we are going to talk all about 2025 year end success. So I know we kind of did a year end success episode last year where we talked about things you needed to do to wrap up your year end.

But I feel like there’s just been a lot of changes, not only in tax law, but in just how things are going this year, that it’s always necessary to maybe do like a rehash of this every year. That way you’re fully prepared for 2026. So let’s dive into this and just acknowledge the fact that you have made it through another year of business.

If you’re coming out the end of the year and you’re still in business, you know, I want you to pause and reflect and just really engage with the fact that you have succeeded at going through another year in business. And now the kind of tough part in wrapping up and making sure you’re prepared for April when tax season hits again, I want you as a listener to be able to file in April. I don’t want you to have to wait until October because you have to pay in April.

It doesn’t matter what state you live in. It doesn’t matter where you are. You have to pay in April.

So I would rather you just file and pay in April and get it over and done with and try and push it to October. We want to make sure that we are protecting ourselves for next year, that we have the clarity that we need, and that we’re preparing for just a stronger start in the new year. Step one is making sure that everything is clean up and reconciled.

So if you don’t have a bookkeeper, this is something you are probably doing yourself. You want to make sure that you’re getting this all done in December. You don’t want to wait until January.

You don’t want to wait until October or even just the beginning of January. Just make sure every transaction, even your December ones, are categorized and tied to the correct accounts. Reconciling all of your bank accounts, credit cards, loans, payment processors, but also reconciling any like payment or payroll accounts.

Reconciling any of those accounts that might have a balance. Reconciling any clearing accounts for your payment processors like Square or anything like that just to make sure that there are no loose ends and nothing is kind of missing or hanging out in the outfields. And then double checking for that missing income, any sort of duplicates, any personal expenses that are mixed in, or any uncoded expenses.

So obviously if you do have a bookkeeper, this is all done for you. They already have done this for you throughout the year. So this isn’t a lot of panic.

But I don’t want you to have to wait until like April and then try and cram it all into 10 seconds and be like, oh okay, I made this much last year. I’ve already discussed previously how doing this monthly is so vital and so important to you as a business. But I just want to talk about like making sure that we are doing it before everything gets into the huge fray of things again.

Because you wait until the end of January, you’re already like a month into the year, right? So doing it when you come back from your January break and making sure that everything is kind of good. Because I know a lot of people usually take off the end of the year slash beginning of the year to make sure that they are spending time with family because it’s kind of like a celebration thing, right? Just making sure that your books are really good so that tax season when it comes to April, you’re just completely ready. You could file already, you know? If you have all of your stuff ready.

I think they open the e-file by like the middle of January. You could hand everything to your CPA and say, I’m ready, let’s do it. Especially if you’ve paid estimated taxes.

I’ve seen so many people just get their taxes filed and be done with it. But you know, you can also wait until April. You just, you’re ready.

You have everything now, right? So then the second thing we want to do is confirm our receipts and documentation. We did talk a little bit about receipts and everything like that earlier. So just making sure that you’re gathering all of those, especially for those ones over 75, those larger purchases and attaching them to relevant transactions.

So nothing is floating or at least having a place where they are so you know exactly where that data is. So in the event you have some sort of audit, you have everything in hand, right? It’s very critical because you want to make sure that you’re categorizing them correctly too. Like you’re not going to remember what you purchased from Amazon seven months ago, unless you’re like a genius.

Maybe you would do, maybe you only have like three Amazon purchases, but you want to make sure that that’s top of your priority list, right? It’s very critical to make sure that those are just, you are aware to make sure that you categorize them properly. Besides that, that proper documentation can help you tell the full picture of your business and not just having a piece of paper, right? We already talked about this in the receipts episode, so I’m not going to go super into this. The next thing you want to do is really a reflection.

So we’re going to go deeper into a couple of these categories over the coming weeks. A lot of the episodes coming up for this December are year-end slash reflection slash preparing for next year because I feel like December is the perfect time for us to kind of take a step back from all the financial strategy that we’ve been building up through the year and really focus on what we’re doing as a business and how we want to grow. So I want you to pull two reports, a profit and loss and a balance sheet for the entire year of 2025.

And this is all of 2025. And I want you to compare that to 2024 and just ask yourself as a year over year, like as a big picture, what changed? Where did your revenue shift? What expenses went up and why? And I want you to analyze that and ask those questions. Again, we’re going to go deeper into that in the coming weeks, so I’m not going to really touch on a whole lot here.

But one of the things we’re going to want to look for is emerging patterns. Maybe something grew faster than expected. Maybe, you know, software subscriptions crept up.

Just really looking at everything and not judging yourself, just using that as a complete picture so that you can grow from it and understand it and make the necessary changes that you want to make to 2026 data. OK, then you also want to check your owner’s pay and distributions. So you want to just review how much you drew from the business, how you paid yourself and whether that aligns with your goals.

Like, do you need to up that this year? Do you need to pull back this year? Just making sure that your draws and your distributions were recorded separately, that they were recorded as an owner’s distributions and not expenses. For S-corps, verifying that you had reasonable compensation, because that’s very important. We’ve talked about that as an S-corp.

You need to make sure that you have reasonable compensation. So just reviewing that and then just asking again if you are properly paying yourself or is the business kind of like holding you back from paying yourself? Like, what do you need to do to pay yourself better? Because this then sets up a conversation for yourself to make sure that you’re paying yourself properly whenever it comes to 2026. Our next step is preparing for taxes.

So getting everything now and making sure that you have this all is going to be so vital in April so you can literally just pass everything off to your tax person, even if you want to pass it off now, like I said, and wait to file till April. It’ll just be so important. So first of all, outstanding W-9s and getting your 1099s.

The 1099s are due by the end of January. They’re not due in April. So don’t fall for the fact that they’re due at the end of April.

They are due in January. You need to make sure they’re filed. You can get penalized for this.

So collect any W-9s from contractors and get those 1099s out. Review your sales tax and payroll filings to make sure everything is filed through December. In fact, download those as well as any W-2s that you might have.

Gusto, Paychex, Rippling, whatever you use will have some sort of end of year payroll package that you can download and then keep in your files. That way you can upload it later. And then of course, estimating your tax savings.

So how much did you set aside for Q4 or how much do you need to set aside for April to make sure that you are paid up and you won’t owe anything? Once you’re done and everything is good, send your finalized books to your CPA before the end of January if possible. That way you can go into next year prepared. You’re not behind.

At the end of January, you’ve kind of got all that done. Again, you don’t have to file in April. If you want to push it to October, you can.

But at least your CPA has your finalized books. You’re good to go. You know what I mean? So I want to talk about a couple of things that have changed over this year, including some different tax laws and things like that.

And if you guys see me kind of like looking to the left here, for those of you who are watching me on YouTube, I am just looking at some of my notes that I wrote down. So I want to make sure that I’m giving you guys accurate data. Okay.

So first of all, the standard deduction and the joint filing deduction have rose. The standard deduction went up to $15,000, which is $400 more. And then the joint filing went up to $30,000, which is $800 more.

Head of household also rose to $22,500. So we just want to make sure that we’re aware of that because as single member LLC slash sole proprietors, that does affect us a little bit more. Of course, your standard deduction means that you could end up getting money back because if you’re not deducting like individual things, then obviously that $30,000 is going to help a little bit.

Now, of course, one of the biggest major legislative changes is the One Big Beautiful Bill Act, which was passed your CPA. If you work with the CPA, they probably let you know about all of these different things that are changing. So there’s just a bunch of different things that are going on.

I’m not knowledgeable enough to talk on this, but it may affect how much tax you owe personally, which feeds into your business income, distributions, energy structure, and growth strategy. It can just affect a whole ton of different things. I know that we were keeping, I think, the deduction, which is the business tax deduction.

I think it’s the QBT or something like that. Again, not knowledgeable enough to speak on this, but I know that there was a lot of different changes that came with that bill. Speak with your CPA if you need to be aware of what’s going on there.

Now that you’ve cleaned up and reviewed your business numbers, this gives you a glance at the tax picture so that you’re fully informed. Obviously, you’re not a tax lawyer. You want to make sure that you’re talking to your CPA about these things, but at least you understand that there are certain changes that have come around this year, and that is one of the biggest ones.

The OBBBA Act or the OBB Act is just like, there’s a lot of stuff that goes into it that needs to be discussed with your CPA if they haven’t already. The next step we want to do is just reflect strategically. Again, we’re going to go deeper into this later on, but just looking at what worked financially this year, where did money feel tight or misallocated, what surprised you? Looking at your financials, what surprised you? Then based on the clean numbers, what are two to three metrics that you want to track going into next year? Do you want to track your owner’s pay ratio, gross margins, things like that? You want to just make sure that you’re keeping track of all those different things that are going on.

Now, the last thing that I want you to do is just take a moment to pause and celebrate all your wins, whether it was your revenue milestone, whether it was a process that became smoother and just overall was a better year for you, or simply that you finished out the year super, super strong. Just make sure that everything that you’ve done to clean up this year-end and make sure that you’ve got your books completely ready, it all counts. It’s part of running a business and running it properly.

Next year, if you haven’t already and you’re scrambled to get everything caught up this year, make sure that you set aside time monthly to do this so that at the end of the year, it’s just a really quick wrap-up and then you’re ready to go for the next year. Now, obviously, again, there are going to be some big changes that happen every year. I will try and become knowledgeable about what changes.

I’m not knowledgeable about tax law, but I am knowledgeable about certain things and I want to make sure that you guys are prepared for that. When you clean your books and reconcile everything and prep for the taxes before the next year, that just means you’re just going to be fully prepared and ready to go. If you are the type of person who’s like, I don’t have time for this, Samantha.

The beginning of the year is just an insane time for me. Reach out, let’s chat. Let’s chat about how I can help you, whether that’s just doing a year-end strategy session and we just talk about your numbers, whether that’s me cleaning up your books or getting you caught up.

We want to make sure that you start 2026 off on the right foot. As always, if you guys enjoyed this episode, please make sure to like it, share it, comment, subscribe, share it on social media so other people like you can find it and we can also enjoy all these episodes together. The podcast has been booming lately and I’m so excited to meet all these new faces and all these new people and I’d love to hear from you, but what more you’d like to hear in 2026? So leave me a comment, you know, shoot me an email, whatever it is, and let’s chat a little bit about that.

Otherwise, you know, I do wish you guys the best week ever and we’ll see you next week. Farewell, fellow travelers.