Year-End Tax Planning: What to Start Doing by Q3 ๐ผ๐
The end of the year may still feel far off but when it comes to taxes, Q3 is your golden window to take action. Strategic tax planning in the third quarter allows business owners to stay ahead of their finances, maximize deductions, and avoid last-minute stress.
At KMT Consulting, we believe in proactive planning, not reactive scrambling. Hereโs what every small business owner should start doing by Q3 to optimize year-end tax results and make the most of the months ahead.
1. Review Your Year-to-Date Financial Statements for Tax Opportunities
Now is the time to take a close look at your year-to-date Profit & Loss Statement, Cash Flow Statement, and Balance Sheet. These reports tell the story of how your business is performing and help identify areas where you can improve profitability, control spending, or take advantage of tax-saving strategies.
Ask yourself:
Are my expenses tracking higher or lower than expected?
Has revenue exceeded projections?
Are there patterns or red flags in cash flow?
Understanding your financials now โ while thereโs still time to make changes โ is one of the most effective ways to improve your tax position before year-end.
2. Estimate Your Year-End Taxable Income to Reduce Surprises
Projecting your business income through the end of the year helps you anticipate your tax liability and make decisions from a place of strategy, not panic. If youโre on track for a higher income year, Q3 is the time to consider:
Income deferral strategies (where appropriate)
Accelerating tax-deductible expenses
Adjusting your personal compensation
This income projection is also critical for planning your quarterly installment payments, reducing the risk of interest or penalties from underpayment.
3. Plan Capital Purchases Strategically for Tax Deductions
Thinking of buying new equipment, business software, or a company vehicle? Planning these purchases now โ rather than waiting until December โ ensures:
You have the cash flow to support the investment
The purchase qualifies as a legitimate business expense
You maximize allowable deductions on your upcoming return
Donโt make major business purchases without a plan โ consult your accountant to ensure they align with both your tax and operational goals.
4. Revisit Your Salary and Distribution Mix Before Year-End
One of the most powerful year-end tax planning strategies for incorporated business owners is optimizing how you pay yourself. Q3 is an ideal time to review your salary vs. distribution mix and determine if it still supports your financial goals and tax position.
Consider:
Have you paid enough salary to create retirement plan contribution room?
Would distributions result in a more tax-efficient payout this year?
Do you need to issue a shareholder bonus before year-end?
This is also the time to plan for payroll remittances, and tax installment adjustments based on your compensation structure.
5. Organize Your Accounting and Reconcile Accounts
Clean books arenโt just helpful โ theyโre essential for effective tax planning. If your books are behind, incomplete, or full of uncategorized transactions, youโll struggle to take advantage of deductions or make confident decisions.
Use Q3 to:
Reconcile all business bank and credit card accounts
Categorize all expenses correctly and consistently
Track down missing receipts or invoices
Clean up aged receivables or payables
With organized financials, you can move into Q4 focused on strategy โ not scrambling to catch up.
6. Schedule a Tax Planning Review with Your Accountant
A professional tax planning review in Q3 gives you clarity, confidence, and options. This meeting allows your accountant to assess:
Your current and projected income
Unused deductions or credits
Incorporation or restructuring opportunities
Changes in tax legislation that may affect you
The earlier you book this conversation, the more opportunities there are to take strategic action before year-end. At KMT Consulting, we partner with you to make tax planning feel less overwhelming โ and more empowering.
Donโt Wait Until Year-End โ Start Planning Now
Good tax planning doesnโt happen by accident. Itโs built through intentional, well-timed steps โ and Q3 is the ideal time to put those steps into motion.
By reviewing your financials, forecasting income, tidying your books, and making informed decisions now, youโll be setting yourself up for a smoother, more profitable year-end.
๐ฉ Need support planning your next move? Letโs talk strategy โ weโre here to help you finish the year strong, confident, and in control.
Contact us and schedule a meeting here!
