Year-End Tax Moves for Small Business Owners in 2026, Part 2

Gloria

31 minutes ago

2 min read

A soft watercolor illustration of a desk with a spiral calendar with one date circled, a sprig of holly, a cup of coffee, a teal notebook, a stack of envelopes with a pen, and a potted plant, in muted teal and warm neutral tones, representing year-end tax deadlines and paperwork.

In Part 1, I covered the planning moves: equipment purchases, retirement contributions, and the QBI deduction. This week’s four year-end tax moves are about paperwork and deadlines, and the OBBBA changed the rules for several of them.

Look out: missing them can cost you in penalties and lost deductions.

The Last Four Year-End Tax Moves

4. Independent Contractors

Good news: the 1099 threshold went up. For payments made in 2026, you only need to file a 1099 for someone you paid $2,000 or more. That amount is up from $600. Starting in 2027, the 1099 amount will adjust for inflation.

The most common payments that need a 1099:

Service providers who aren't incorporated, like freelancers, consultants, and repair people
Attorneys and law firms, even if they're incorporated
Rent for office space or equipment

You generally don't need to send a 1099 to a corporation (other than an attorney) or for payments you made by credit card or a payment app like PayPal.

Your to-do now: collect a Form W-9 from every contractor you've paid this year. Chasing tax ID numbers in late January is no fun.

Some states haven't adopted the new threshold, so check your state's rules if you file 1099s there.

5. Charitable Giving

Whether you give through your business or personally, your charitable deductions generally show up on your personal return. Sole proprietors claim them directly. Partnership and S corporation owners see them pass through on their K-1.

Two changes start in 2026:

If you take the standard deduction, you can now deduct up to $1,000 of cash gifts ($2,000 if married filing jointly). Gifts to donor-advised funds don't count.
If you itemize, only giving above 0.5% of your adjusted gross income counts. With $150,000 of income, the first $750 isn't deductible.

If you itemize, it may make sense to "bunch" two years of giving into one.

One exception: sponsorships with a business purpose, like your logo on a Little League jersey, may be deductible as advertising. The rules for C corporations are different, so if the deduction is important to you, ask before you give.

6. Two Dates to Mark

January 15, 2027: Your fourth-quarter estimated tax payment is due.
February 1, 2027: W-2s and 1099-NECs must go out to workers and be filed. (January 31 falls on a Sunday.)

If you have employees who earn tips or overtime, the 2026 W-2 has new boxes for reporting those amounts. Make sure your payroll system is tracking them now, not in January.

7. Clean Books

None of these moves work without accurate numbers. Before December 31:

Reconcile your bank and credit card accounts.
Separate any personal expenses from business ones.
S corporation owners: submit expense reimbursements to your company before year-end.

Clean books show you where you stand while there's still time to act.

Not sure which of these moves fit your business? Book a free consultation and I'll go over your numbers with you before December 31.

The information provided in this blog is for general informational purposes only and is not intended to be comprehensive or serve as professional advice. Every business and financial situation is unique. I encourage you to consult with a qualified professional to address your specific needs and circumstances.