As the year draws to a close, business owners operating LLCs (default taxation) or S Corporations (traditional S Corporation or LLC taxed as an S Corp) have a valuable opportunity to evaluate financial strategies before December 31. While both structures offer pass-through taxation, proactive year-end planning can help optimize after-tax outcomes and strengthen long-term wealth strategies.

Review Income and Expense Timing

An important decision is whether to accelerate or defer income and expenses. For example, if 2025 is expected to bring higher personal income, it may make sense to delay billing clients until January and accelerate deductible expenses into the current year. Conversely, if income will be lower in the coming year, capturing more revenue before December 31 may prove advantageous. The key is aligning recognition with your broader cash flow and tax outlook.

Evaluate Retirement Contributions

LLCs and S Corps can fund retirement plans that reduce taxable income while building future wealth. A Solo 401(k) or SEP IRA allows significant contributions, often far above what can be saved in a traditional IRA. For S Corp owners, contributions must be based on W-2 wages, not distributions, so compensation planning becomes part of the equation. Reviewing these opportunities before year-end for contributions that are maximized.

Optimize Owner Compensation

For S Corporations, the IRS requires owners to pay themselves a “reasonable salary.” This is not only a compliance issue but also a planning tool. Too low a salary risks audit, while too high a salary can increase payroll tax liability unnecessarily. Reviewing your mix of salary and distributions before December 31 can create meaningful efficiencies.

Review Deduction Opportunities

Year-end is a good time to take stock of deductible business expenses—ranging from equipment purchases to professional development. Section 179 expensing (immediately deduct the cost of qualifying business property in the year the property is placed in service) and 100% bonus depreciation (where applicable) may provide an immediate deduction for qualifying property. Careful review confirms that eligible costs are recognized this year rather than slipping into the next.

Address Estimated Taxes and Withholding

Owners of LLCs and S Corps often face quarterly estimated tax requirements. Underpayment can result in penalties, but overpayment ties up valuable working capital. Reviewing year-to-date income and deductions allows adjustments to December payments, aligning tax outflow more closely with actual liability.

Consider Entity Structure

As income grows, the choice between LLC and S Corporation taxation may merit review. For example, an LLC taxed as an S Corp may reduce self-employment tax exposure. Conversely, remaining a partnership may allow greater flexibility in allocating income among members. Revisiting entity elections at year-end allows time to plan for changes in the new year.

Wealth Done R.I.T.E.™ Takeaway.

Year-end planning is not just about minimizing this year’s tax bill. It’s about aligning Retirement, Investments, Tax efficiency, and Estate considerations into an integrated framework. By reviewing cash flow, compensation, and structural decisions now, business owners can enter the new year positioned for stronger results across both personal and business wealth.

Now is the time to align your business income, retirement savings, and tax strategies before year-end. A Wealth Done R.I.T.E.™ review helps small business owners integrate Retirement, Investments, Tax efficiency, and Estate planning into a single forward-looking plan.

Schedule a year-end strategy session to position your LLC or S Corp for stronger results in 2026.

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For Informational Purposes only and not for legal or tax advice.

About the Author – Marie Feindt, JD 

Marie Feindt is the Planning Specialist – Estate Attorney at Members’ Wealth, a boutique wealth management firm that offers a comprehensive and holistic approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of estate planning experience, Marie and the Members’ Wealth team thrive on bringing clarity and confidence to clients’ unique situations. She believes everyone, young adults and older, need the essential documents to conserve and preserve and transfer assets accumulated during lifetime to the next generation.

Marie received her JD from Widener University School of Law, her bachelor’s degree from Penn State University, University Park and is currently enrolled in the Villanova University Charles Widger School of Law Graduate Tax Program.

Marie is an Adjunct Faculty at the Villanova University College of Professional Studies Paralegal Professional Certificate Program where she teaches Estates & Trusts and Civil Procedure & Litigation and Torts & Personal Injury Law.

Marie volunteers for a monthly legal clinic at The Salvation Army in Chester, PA facilitated by the Christian Legal Clinic of Philadelphia. She has served on the Women’s Commission of Delaware County and as a Board Member for the Delaware County Literacy Council.

Marie enjoys biking, reading, yoga and walking in her free time with her husband and three children.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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