How to Avoid a Big Tax Bill in April: Simple Year-End Moves That Actually Work
December 9, 2025
Stop waiting for "Tax Season" to manage your taxes. By then, it’s too late.
For many small business owners, April isn’t stressful because of the paperwork, it’s stressful because of the surprise. A bigger tax bill than expected. Quarterly payments that were too low. Not enough cash set aside to cover the difference.
The good news? The "April Panic" is entirely preventable. But you have to act now, while the calendar still says 2025.
Here are 7 year-end moves that actually move the needle, no gimmicks, no "buy a truck you don't need," just practical financial management.
1. Get a "Back-of-the-Napkin" Projection
You don’t need a full audit to get clarity. You just need a rough estimate of where you stand. A 30-minute review of your year-to-date profit can tell us:
If you are drastically underpaid on your estimates.
Whether you should push to collect invoices now or wait until January.
If a last-minute retirement contribution is worth the cash outlay.
The Expert Take: I’d rather you know you owe $10,000 today than find out in April when you have find the cash.
2. "Safe Harbor" is Your Best Friend
If your business grew this year, your standard quarterly payments probably didn't keep up. The IRS charges penalties for this, but there is a cheat code called Safe Harbor. You can generally avoid underpayment penalties if you have paid in:
100% of your prior year's total tax.
110% of your prior year's total tax (if your AGI is over $150k).
The Expert Take: If you are short, making one "catch-up" payment by January 15th can stop the penalty clock.
3. Pre-Pay the Right Expenses
Don't just spend money to lower your tax bill. Spending $1.00 to save $0.30 is bad math. However, if you have necessary expenses coming up in January, paying them in December makes sense.
Do Pay: Insurance premiums, professional licensing, software subscriptions, or employee bonuses.
Don't Pay: Large equipment purchases you don't need, or marketing spend that won't yield results until Q2.
4. S-Corp Owners: The "Payroll Trap"
If you operate as an S-Corp, December is your last chance to fix your W-2. Common mistakes I see every year:
Reasonable Comp: Did you take enough salary? If you took $100k in distributions but only $20k in salary, you are flagging yourself for an audit.
Health Insurance: If the company pays your health premiums, that amount must be included on your W-2 (Box 1) to be a valid deduction. If you miss this step, you lose the deduction.
5. The "Solo 401(k)" Deadline
Retirement plans are still the best tax shelter available, but the clock is ticking.
The Deadline: If you want to open a new Solo 401(k) for 2025, the plan documents must be signed by December 31st.
The Nuance: You don't have to put the money in yet (you have until tax day for that), but the account must exist before the ball drops. If you wait until January 1st, you lose the 2025 option entirely.
6. Clean Up Your Books (Before I Do)
Messy books result in a bigger bill. When your books are unclear, we often have to assume the conservative option, which means fewer deductions for you. Take an hour to:
Categorize "Uncategorized Expenses."
Mark personal expenses as "Owner Draws."
Record any business mileage you haven't tracked yet.
7. Respect the Cash Flow
Profit is not cash. Just because your P&L says you made money doesn't mean you have it in the bank. When we run your projection, we calculate the tax bill, but we also look at your liquidity. Do you have the cash to pay the bill and make your Q1 estimated payment in April? April tax bills aren’t just a math issue, they’re a cash flow issue.
The Bottom Line
Most April surprises happen because business owners wait until "Tax Prep Season" (February/March) to look at their numbers.
But the real decisions, the ones that save you thousands, happen in November and December.
Written by Kindled Planning: Light the way to your financial future.
A CPA-led personal CFO service helping families and business owners make confident, tax-smart financial decisions, without losing sight of what matters most.
