December 31 is an absolute deadline. Unlike most business decisions — where you can course-correct, renegotiate, or revisit — tax planning strategies expire at midnight on the last day of the year. Income accelerated or deferred, equipment purchased or delayed, retirement contributions made or missed: all of these decisions carry tax consequences that cannot be reversed after the calendar turns.
This guide walks through the most effective year-end tax planning strategies for Utah small businesses, organized by the decisions that must happen before December 31 versus those that extend into tax filing season.
Step 1: Get a Preliminary Year-End Income Projection
You cannot make smart year-end decisions without knowing where you stand. A preliminary projection — completed in October or early November — should show:
- Estimated taxable income for the year, before any remaining planning moves
- Estimated federal tax liability and bracket
- Estimated Utah tax liability at 4.65 percent
- Comparison to prior-year liability (to assess estimated tax penalty risk)
- Available deductions and credits not yet claimed
This projection becomes the foundation for every decision that follows. All year-end strategies either accelerate deductions into the current year, defer income into next year, or both — and the right answer depends on your projected rate this year versus your projected rate next year.
Strategy 1: Accelerate Deductions into the Current Year
Purchase Equipment Before December 31
If your income projection shows you will be in a higher bracket this year than next — or if income is unusually high due to a one-time event — accelerating deductible purchases into the current year reduces this year’s taxable income.
Under Section 179 and bonus depreciation, equipment placed in service by December 31 can be fully deducted in the current year. “Placed in service” means the asset is available for its intended business use — it does not have to be fully operational or paid for if purchased on account.
Common accelerated purchases: computers and technology, office furniture, software licenses, machinery, vehicles, and signage. Order and receive delivery before December 31.
Prepay Deductible Expenses
Cash-basis businesses can deduct expenses in the year paid — not the year the service is received — as long as the prepayment does not create an asset extending beyond 12 months. Deductible prepayments include:
- January rent paid in December
- Annual insurance premiums due in Q1
- Professional membership dues for the next year (if within the 12-month rule)
- Estimated state income taxes paid before year-end
Accelerate Payroll and Bonuses
Year-end bonuses paid to employees by December 31 are deductible in the current year (for cash-basis employers). For accrual-basis employers, bonuses accrued by December 31 are deductible even if paid within 2.5 months of year-end.
Strategy 2: Defer Income into Next Year
Delay December Invoicing
Cash-basis businesses recognize income when received, not when invoiced. Invoices sent on December 31 that are not paid until January produce January income — deferring tax by 12 months. If your income projection shows you are near the top of your current bracket, or if next year will be a lower-income year, deferring income by delaying December billing is a legitimate strategy.
Accelerate Cost of Goods Sold
Manufacturing and inventory-based businesses can review year-end inventory levels. Excess obsolete inventory should be written down to net realizable value — the write-down is a deductible loss. Identifying and disposing of unsaleable inventory before December 31 accelerates the deduction.
Strategy 3: Maximize Retirement Contributions
Plan-Type Determines Deadline
| Plan Type | Employee Deferral Deadline | Employer Contribution Deadline |
|---|---|---|
| 401(k) | December 31 | Extended return due date |
| SEP-IRA | Extended return due date | Extended return due date |
| SIMPLE IRA | December 31 (for employee; Oct. 1 to set up new plan) | Extended return due date |
| Defined Benefit | Extended return due date | Extended return due date |
For sole proprietors and single-member LLCs taxed as sole proprietors, the solo 401(k) employee deferral — up to $23,000 in 2024, plus $7,500 catch-up for age 50+ — must be deposited or documented by December 31 if you established the plan before that date.
Maximize the QBI Deduction Through Retirement Contributions
Pass-through business owners (S-Corp shareholders, partners, sole proprietors) may deduct up to 20 percent of qualified business income (QBI) under IRC Section 199A. For some business owners, making larger employer retirement plan contributions increases W-2 wages relative to QBI in a way that preserves more of the deduction. This interaction requires careful modeling.
Strategy 4: Harvest Capital Losses
If your business or personal portfolio holds investment positions at a loss, selling before December 31 crystallizes losses that offset capital gains and, up to $3,000, ordinary income. Capital loss carryforwards that are never offset against gains are wasted each year.
Tax-loss harvesting does not require exiting your investment thesis permanently. The wash-sale rule — which disallows a loss if you repurchase substantially identical securities within 30 days before or after the sale — applies to stocks and funds, but not to different securities in the same industry.
Strategy 5: Manage the Utah Pass-Through Entity Tax Election
Utah allows pass-through entities (S-Corps, partnerships, and multi-member LLCs taxed as partnerships) to elect to pay Utah income tax at the entity level. The entity-level payment is a fully deductible business expense for federal purposes — bypassing the $10,000 individual SALT deduction cap.
Year-end significance: The payment should generally be made before December 31 of the tax year to maximize federal deductibility in the current year.
For a partnership with $500,000 in Utah-source income, the PTET payment at Utah’s 4.65 percent rate is $23,250. At the 24 percent federal bracket, that saves $5,580 in federal tax that would otherwise be lost under the SALT cap.
See our Utah PTET guide for full election mechanics.
Strategy 6: Review Entity Structure Before Year-End
Sole Proprietor Considering S-Corp Election
An S-Corp election becomes effective January 1 of the following year if filed on Form 2553 by March 15 (for calendar-year S-Corps). If your net self-employment income exceeds $60,000–$80,000 annually, the payroll tax savings from reasonable S-Corp salary treatment often justify the additional compliance costs.
See our S-Corp vs. LLC comparison for the analysis framework.
Strategy 7: Time Charitable Contributions
Donor-Advised Funds
A donor-advised fund (DAF) allows you to contribute a lump sum in the current year — taking the full deduction now — and then distribute grants to qualified charities over multiple years. This strategy is particularly useful when income is unusually high in the current year.
Bunching Charitable Deductions
If your itemized deductions normally fall below the standard deduction ($29,200 for married filing jointly in 2024), consider bunching two years of charitable giving into a single year to push above the standard deduction threshold.
Strategy 8: Review Estimated Tax Payments and Avoid Penalties
Fourth Quarter Estimated Tax Deadline
The Q4 estimated tax payment for calendar-year businesses is due January 15 (for individuals and sole proprietors) or December 15 (for corporations). If your income projection shows you will owe significantly more than expected, making an additional estimated payment before the due date avoids the underpayment penalty.
Safe Harbor Rules
You avoid the underpayment penalty if you pay at least (1) 100 percent of prior-year tax liability, or (2) 90 percent of current-year tax liability — whichever is smaller. For taxpayers with adjusted gross income above $150,000, the prior-year safe harbor is 110 percent of the prior year’s tax.
Strategy 9: Conduct a Benefits and Compensation Review
Year-end is the time to verify that any non-cash benefits provided during the year were properly classified and that excess personal use of company vehicles has been added to W-2 wages.
W-2 Preparation Considerations: Confirm employee addresses are current, verify Social Security numbers, ensure that S-Corp owner health insurance premiums are added to W-2 boxes 1, 3, and 5 as required, and confirm that any employer HSA contributions are correctly coded in Box 12.
Year-End Checklist for Utah Small Businesses
- Complete preliminary income projection with CPA
- Review Section 179 / bonus depreciation opportunities
- Identify deductible prepayments within the 12-month rule
- Confirm Q4 estimated tax payment amounts and deadlines
- Maximize retirement plan contributions (employee deferrals by 12/31)
- Evaluate Utah PTET election and make payment if elected
- Review capital gain/loss positions; execute tax-loss harvesting
- Confirm WOTC paperwork was filed within 28 days of each qualifying hire
- Evaluate entity structure change for next year
- Review W-2 fringe benefit reporting requirements
- Batch charitable contributions if itemizing
- Confirm mileage logs are complete and documented
- Review home office deduction eligibility and square footage
Schedule Your Year-End Planning Meeting Now
The most common mistake we see: business owners call in December with an unexpected tax liability and limited options. At that point, the only moves available are retirement contributions and last-minute equipment purchases.
Call (801) 927-1337 or visit cpaone.net/tax-planning to schedule your year-end planning meeting. You can also reach us at admin@cpaone.net. We work with businesses throughout the Kaysville, Layton, Bountiful, Salt Lake City, and broader Davis and Weber County areas, and serve clients statewide through our secure remote platform.
Author Bio | Missy Dennis, CPA | Partner | FJ & Associates, PLLC | Kaysville, Utah
Missy holds a Master of Accounting degree from the University of Utah and is a licensed Certified Public Accountant. She is committed to providing clear, accurate, and actionable guidance so clients can navigate complex financial decisions with confidence. With more than twenty years of public accounting experience, Missy Dennis specializes in: Tax preparation and tax advisory; Bookkeeping strategy alignment; Estate and trust taxation; Audit and consulting services; Low-income housing tax credits; Non-profit accounting; Small- and mid-sized business advisory.
