The third quarter is the perfect time to start planning your year-end tax strategy. Waiting until December means missing opportunities to maximize deductions, adjust estimated payments, and position your business for tax savings. Taking action now gives you time to make strategic moves that can significantly impact your bottom line.
Review Your Year-to-Date Financial Performance
Before you can make smart tax decisions, you need to know where you stand financially. Pull your profit and loss statements, balance sheets, and cash flow reports from January through September. This review helps you project your annual income and identify potential tax liabilities before year-end. If your books aren’t current, our Virtual Bookkeeping services can get you caught up quickly so you have accurate data to work with.
Compare this year’s performance to last year’s numbers. Are you on track to earn significantly more? Less? This comparison helps you anticipate whether you’ll owe more in taxes or potentially qualify for deductions you didn’t use previously. Understanding your financial trajectory now gives you three months to make adjustments rather than scrambling in December.
Maximize Retirement Contributions Before Year-End
Retirement plan contributions are one of the most powerful tools for reducing taxable income. If you have a SEP-IRA, SIMPLE IRA, or solo 401(k), Q3 is when you should calculate how much more you can contribute before December 31st. For 2026, SEP-IRA contributions can be as high as 25% of compensation or $66,000, whichever is less.
Don’t forget about employee retirement benefits if you have staff. Matching contributions are deductible business expenses that benefit both you and your team. Setting up a retirement plan takes time, so starting this process in Q3 ensures everything is in place before the deadline. Our Tax Planning team can help you determine which retirement strategy offers the best tax advantages for your specific situation.
Accelerate Deductible Expenses
If you’re projecting higher income this year, consider accelerating planned expenses into 2026 rather than waiting until 2027. Purchase equipment, software, or supplies you’ll need anyway before December 31st. Under Section 179, you can deduct up to $1,160,000 in qualifying equipment purchases, which can provide substantial tax savings for Greenville businesses investing in growth.
Prepaying certain expenses can also reduce your current year’s tax burden. This might include prepaying rent, insurance premiums, or subscription services. However, be strategic—only accelerate expenses that make business sense, not just for tax purposes. Cash flow matters, and you don’t want to create a financial strain just to save on taxes. Schedule a consultation for Business Tax Services to discuss which expense acceleration strategies work best for your business.
Adjust Your Estimated Tax Payments
Q3 estimated tax payments are due September 15th, making this the ideal time to reassess whether you’re paying enough—or too much. If your income is higher than projected, increasing your Q3 and Q4 payments can help you avoid underpayment penalties. Conversely, if income is lower, you might be able to reduce your remaining payments and improve cash flow.
Many business owners simply pay the same amount each quarter based on last year’s taxes, but this approach often leads to surprises in April. Take 30 minutes to recalculate based on your actual year-to-date income. The IRS expects you to pay at least 90% of your current year’s tax liability or 100% of last year’s (110% if you’re a high earner) to avoid penalties. Our Tax Planning experts can run these calculations and ensure you’re on track.
Consider Equipment Purchases and Bonus Depreciation
While bonus depreciation has been phasing down in recent years, it still tax benefits. For 2026, you can deduct 40% of qualifying property in the first year, with the remaining amount depreciated over time. This makes Q3 an excellent time to evaluate equipment needs and plan purchases strategically.
Beyond bonus depreciation, Section 179 allows immediate expensing of qualifying assets. Vehicles, computers, machinery, and even certain property improvements may qualify. The key is ensuring these purchases are placed in service before December 31st. If you’re considering significant equipment investments, don’t wait until December when supply chain issues or delivery delays could push your purchase into the next tax year.
Review Your Business Structure and Entity Election
Your business entity type significantly affects your tax situation. If you’ve been operating as a sole proprietor or LLC and your income has grown substantially, Q3 is the time to explore whether an S-Corp election would save you money. S-Corp status can reduce self-employment taxes by allowing you to take part of your income as distributions rather than wages.
Making an entity change or election typically requires advance planning and paperwork. Some elections must be made by March 15th of the tax year, but exploring your options now means you’ll be ready to act when the window opens. Our New Business Registration team can evaluate whether changing your structure makes sense and guide you through the process.
Clean Up Bookkeeping and Resolve Outstanding Issues
Nothing derails year-end tax planning like incomplete or inaccurate books. Use Q3 to reconcile all accounts, categorize transactions properly, and resolve any discrepancies. This cleanup work takes time, and doing it now prevents the year-end crunch that leads to mistakes and missed deductions.
Review outstanding invoices and consider whether any need to be written off as bad debt. Identify any personal expenses that accidentally went through the business and correct them. Ensure all business expenses are properly documented with receipts and explanations. If your bookkeeping has gotten away from you, our Virtual Bookkeeping services can restore order and give you confidence in your financial data going into tax season.
Plan for Next Year’s Taxes Now
Q3 isn’t just about finishing 2026 strong—it’s also about setting yourself up for success in 2027. Review what worked and what didn’t this year. Did you have sufficient quarterly payment amounts? Were you surprised by any tax changes? Use these insights to create a better system for the coming year.
Consider scheduling a comprehensive tax planning session before the holiday rush begins. This proactive approach allows you to implement strategies throughout the year rather than reacting to problems during tax season. Whether you need help with Individual Tax Preparation or comprehensive business tax strategy, taking action in Q3 puts you ahead of the curve.
Ready to make strategic tax moves before year-end? Contact us today to schedule your Q3 tax planning consultation. Our Greenville team specializes in helping Upstate South Carolina businesses minimize tax liability and maximize financial success. Don’t wait until December—the decisions you make now will impact your tax bill in April.
Frequently Asked Questions
Q: When is the deadline for Q3 estimated tax payments?
A: The Q3 estimated tax payment deadline is September 15, 2026. If this date falls on a weekend or holiday, the deadline moves to the next business day. Missing this deadline can result in underpayment penalties, even if you pay your full tax liability when you file your return.
Q: Can I deduct equipment purchased in December for the current tax year?
A: Yes, as long as the equipment is purchased and placed in service by December 31, 2026, you can deduct it on your 2026 tax return using Section 179 expensing or bonus depreciation. “Placed in service” means the equipment is ready and available for use in your business, not just ordered or paid for.
Q: How do I know if I should make an S-Corp election for my business?
A: S-Corp election typically makes sense when your business profits exceed $60,000-$80,000 annually, though every situation is unique. The election can reduce self-employment taxes but adds payroll processing requirements and compliance costs. A tax professional can analyze your specific circumstances to determine if the savings justify the additional complexity.
Q: What’s the difference between accelerating expenses and stockpiling unnecessary purchases?
A: Accelerating expenses means moving up the timing of purchases you were already planning to make. Stockpiling means buying things you don’t actually need just for a tax deduction. The latter rarely makes financial sense because you’re spending a dollar to save 20-35 cents in taxes while tying up cash in unused inventory or equipment.
Q: Is it too late to set up a retirement plan if I’m already in Q3?
A: It depends on the type of plan. You can establish and fund a SEP-IRA up until your tax filing deadline (including extensions). However, 401(k) plans generally must be established by December 31st of the tax year. SIMPLE IRAs have an October 1st deadline for new plans. Starting the conversation now gives you enough time to explore all options and complete the necessary paperwork.
