There are roughly two months left in the 2026 tax year, and for a one-person business that window is worth more than most founders realize. Once December 31 passes, many of the decisions that shape your tax bill are locked in. Before it passes, you still have room to time purchases, fund retirement accounts, tidy up contractor paperwork, and make sure you aren’t heading into a penalty for underpaying through the year.
This year also carries more change than usual. The tax law signed on July 4, 2025, which the IRS now refers to as the Working Families Tax Cuts and which many people still call the One Big Beautiful Bill, rewrote several rules that matter to solo founders, freelancers and small online businesses. Some of those changes apply for the first time to payments you make in 2026. The year-end tax moves below are written for US-based solo operators. They’re a framework for a better conversation with your accountant, not a substitute for one, because the right move always depends on your entity type, your income, and your state.
Close Your Books Before You Make Any Decisions
Every good year-end decision starts with knowing where you actually stand. Before you buy equipment or move money into a retirement account, get your books current through October. Reconcile every business bank and card account, categorize the transactions that have been sitting in a suspense folder, and chase down receipts for anything significant. Then build a simple projection for November and December based on contracts you’ve signed, invoices you expect to collect, and costs you know are coming.
That projection gives you an estimated profit for the year, and almost everything else in this article depends on that number. A founder heading for a strong year has very different options from one who had a slow first half. Guessing at this figure is how people end up buying a laptop they didn’t need to save tax they didn’t owe, or skipping a contribution they could easily have made.
If you want to understand the business provisions of the new law in more depth, the IRS published a recorded webinar on its official YouTube channel walking through the business tax provisions.
Check Your Estimated Tax Position Now, Not in April
Most solo founders don’t have an employer withholding tax from their pay, which means the responsibility for paying through the year sits with them. The IRS explains on its estimated taxes page that most taxpayers avoid the underpayment penalty if they owe less than $1,000 after withholding and credits, or if they paid at least 90% of the current year’s tax or 100% of the prior year’s tax, whichever is smaller. The IRS also notes special rules for certain higher-income taxpayers, so check which threshold applies to you.
Run the numbers against your projection now. If revenue jumped this year, your earlier quarterly payments may have been based on a much smaller tax bill, and the final payment of the year is your chance to close the gap. If you’re short, you’ll know while there’s still time to set the cash aside. If you’re ahead, you can stop worrying and keep that money working in the business. Either way, finding out in late October is far better than finding out when you file.
Time Equipment Purchases Around When They Go Into Service
One of the most significant changes in the new law is the return of full expensing for many business assets. The IRS states that the law provides a permanent 100% additional first-year depreciation deduction, often called bonus depreciation, for qualified property acquired after January 19, 2025. It also raised the Section 179 expensing limit to $2,500,000 for property placed in service in tax years beginning after December 31, 2024, with that amount indexed for inflation in later years.
For a solo business, the practical point is simpler than the code sections suggest. If you were already planning to buy a computer, camera gear, studio equipment or other qualifying property in the next few months, buying it and putting it into use before December 31 can bring the deduction into 2026 instead of spreading it over several years. The IRS’s guidance for gig economy workers notes that for property such as vehicles or certain computers, business use must be more than 50% of total use to deduct up to the full cost of the business-use percentage in the first year.
The key words are “already planning.” Spending a dollar to save a fraction of that dollar in tax is still spending money. Buy what the business genuinely needs, keep the receipts and the date it was first put into service, and let your accountant decide whether expensing it all now or depreciating it over time makes more sense for your situation.
Use the Retirement Plan Window While It’s Open
For many profitable solo founders, a retirement plan is the single biggest lever available, and it also happens to build long-term wealth instead of just reducing a bill. The IRS announced that for 2026 the 401(k) elective deferral limit rises to $24,500, the catch-up contribution for people 50 and over rises to $8,000, and a higher catch-up of $11,250 applies to those aged 60 to 63. The IRA limit rises to $7,500, and the overall limit for defined contribution plans is $72,000.
Those numbers matter because a one-person business can often contribute in two capacities. The IRS explains that in a one-participant 401(k), the owner can make elective deferrals as the employee and also make employer nonelective contributions, subject to the overall limit, with special calculation rules for self-employed people. A SEP is the simpler alternative. According to the IRS, a business of any size, including a self-employed person, can establish a SEP plan as late as the due date, including extensions, of the business tax return for the year, with contributions of up to 25% of each employee’s pay.
Because the deadlines and paperwork differ between plan types, don’t leave this until the last week of December. Talk to your plan provider or accountant in November about which plan fits, what has to be in place by year-end, and what can wait until you file. If you’ve been treating retirement savings as something you’ll get to once the business is bigger, this is the year to reconsider. The habits you build around money now have a lot to do with how your business turns out, and how you approach personal finances can influence your entrepreneurial journey far more than most founders expect.
Get Ahead of Contractor Paperwork
If you pay freelancers, designers, editors or developers, the new law changes your January workload. The IRS confirms that the Form 1099-NEC threshold has increased to $2,000 for payments made in 2026, up from the $600 threshold that applied for decades. Starting in 2027, that amount can be adjusted for inflation. That means some smaller contractor relationships that used to require a form no longer will.
Don’t let the higher threshold make you sloppy, though. You still need to know exactly how much you paid each contractor during the year to decide who crosses the line, and the IRS notes that a 1099-NEC is still required for anyone from whom you withheld federal income tax under backup withholding rules, regardless of the amount. The smart year-end move is to pull a payee report now, collect any missing W-9 forms while people are still responsive, and fix incomplete names or tax ID numbers before the January filing rush. If you’ve already built a system for how you handle contracts and payments without a team, make W-9 collection part of contractor onboarding so this becomes a non-event next year.
Know What Payment Platforms Will Report About You
Many online businesses get paid through payment apps and marketplaces, and the rules for what those platforms report have also changed. The IRS explains that the law retroactively reverted the Form 1099-K reporting threshold for third-party settlement organizations to its earlier level, so these platforms are required to issue a 1099-K when payments in the calendar year exceed $20,000 and the number of transactions exceeds 200.
The important part is what the IRS says next. You must report all of your income when you file, whether or not you receive a 1099-K or any other information return. A higher reporting threshold changes the paperwork you receive, not what you owe. Make sure your own records capture every stream of revenue, including smaller platforms that may never send you a form, so your return reflects the business as it really is.
Don’t Leave the Qualified Business Income Deduction to Chance
Many owners of sole proprietorships, partnerships and S corporations have been able to use the qualified business income deduction for tax years beginning after 2017, and the new law made it permanent. The IRS describes it as allowing eligible taxpayers to deduct up to 20% of their qualified business income, subject to limitations, and notes that it’s available whether you itemize or take the standard deduction. For tax years beginning after 2025, the IRS also lists a new minimum deduction for active qualified business income. Income earned through a C corporation, or as an employee, isn’t eligible.
The deduction interacts with your taxable income, your type of business, and for higher earners, factors like wages paid and property held. That’s exactly why it belongs in your year-end conversation rather than as a surprise at filing time. Your projection, your retirement contributions and your equipment purchases all change your taxable income, and that in turn can change how much of this deduction you keep.
Set Up 2027 Before the Year Even Starts
The best year-end tax move is making next year’s year-end boring. Open a separate account for tax money if you don’t have one, and move a fixed percentage of every payment you receive into it. Put the quarterly estimated payment dates in your calendar now. Decide which bookkeeping tool you’ll use and commit to reconciling monthly rather than in a panic every December. Book a planning session with your accountant for mid-2027, when there’s still time to act on what you learn.
None of this is glamorous, but it’s the kind of discipline that separates a business that grows on purpose from one that keeps being surprised by its own numbers. Spend a few focused hours on these year-end tax moves over the next few weeks, bring your projection and your questions to a qualified professional, and you’ll go into 2027 with more cash, fewer surprises, and a much clearer picture of what your business really earns.
The post The Year-End Tax Moves Every One-Person Business Should Make Before December 31 appeared first on Addicted 2 Success.