Year-end tax checklist for small business owners: 2026

1. Reconcile every account before December 31

Everything else on this list depends on books that match reality. Before the year closes, reconcile each account to its statement:

• Business bank accounts, credit cards and lines of credit.
• Payment processors and merchant accounts, so deposits tie to gross sales, fees and refunds.
• Loan balances, with interest separated from principal.
• Owner contributions and draws, or shareholder distributions, kept apart from income and expenses.
• Accounts receivable and payable, including invoices that may never be collected.

It is also the moment to reclassify personal expenses paid from business accounts and to request missing receipts while vendors can still send copies.

2. Collect W-9s and apply the new 1099 threshold

Ask every contractor or vendor you pay for services for a Form W-9, ideally before the first payment. It gives you the name and taxpayer identification number (TIN) the information return needs. If a payee does not provide a correct TIN, backup withholding at 24% may apply.

The threshold changed for 2026. Under P.L. 119-21, known as the One Big Beautiful Bill Act, the minimum for these information returns rose to $2,000 for payments made after December 31, 2025, and may be adjusted for inflation beginning in calendar year 2027. For 2026 payments:

• Form 1099-NEC: nonemployee compensation of $2,000 or more, including attorneys' fees.
• Form 1099-MISC: rents, prizes and awards, and other income of $2,000 or more. Some items keep lower thresholds, such as royalties of $10 or more and gross proceeds of $600 or more paid to an attorney.
• Card and app payments: payments by credit card or through third-party payment networks are reported by the payment settlement entity on Form 1099-K, not by you.

Form 1099-NEC goes to the IRS and to the recipient by January 31, which in 2027 is a Sunday, so the date moves to Monday, February 1, 2027. See the Instructions for Forms 1099-MISC and 1099-NEC.

3. Close payroll and prepare W-2s

• Confirm each employee's legal name, Social Security number and address.
• Reconcile year-to-date payroll to the four quarterly Forms 941 and to your deposits.
• Add taxable fringe benefits to wages before the last payroll of the year.
• Remind employees to submit a new Form W-4 if their situation changed; the IRS calendar points to doing this before December 1.

The 2026 Form W-2 has new fields created by P.L. 119-21: box 12 code TT for qualified overtime compensation, box 12 code TP for cash tips reported to the employer, and box 14b for the Treasury tipped occupation code. Those amounts need to be tracked through the year, not rebuilt in January.

Under the 2026 Instructions for Forms W-2 and W-3, employee copies and the filing with the Social Security Administration (SSA) are both due February 1, 2027. Employers that file at least 10 information returns must file them electronically.

4. The fourth estimated payment and the early-2027 calendar

Owners of sole proprietorships, partnerships and S corporations generally pay estimated tax personally, because the business income lands on their own returns. According to the 2026 Form 1040-ES, the fourth payment for 2026 is due January 15, 2027, a Friday, and it is not required if you file your 2026 return by February 1, 2027 and pay the full balance with it. Calendar-year corporations make their fourth installment by December 15, 2026.

When a federal due date falls on a Saturday, Sunday or legal holiday, it moves to the next business day. In 2027 that shifts several familiar dates:

The IRS publishes its full 2027 calendar in Publication 509; it is worth confirming these dates when that edition is released.

5. Check retirement plan deadlines

Retirement plan deadlines do not all fall on December 31:

• SIMPLE IRA: can generally be set up effective any date from January 1 through October 1, if the employer did not previously maintain one, with an exception for new employers that come into existence after October 1. See the IRS SIMPLE IRA page.
• SEP: can be set up as late as the due date, including extensions, of the business income tax return for that year, and employer contributions are due by the same date. See the IRS SEP page.
• 401(k) and other plans: each has its own rules for adoption, salary deferrals and employer contributions. Review them with the plan provider before the last payroll of the year.

Contribution limits are indexed every year, so confirm the 2026 figures for your specific plan rather than relying on last year's numbers.

6. Equipment purchases: Section 179 and bonus depreciation in 2026

• Section 179: for tax years beginning in 2026, Rev. Proc. 2025-32 sets the maximum at $2,560,000, reduced dollar for dollar when Section 179 property placed in service during the year exceeds $4,090,000. The amount for a sport utility vehicle is capped at $32,000.
• Bonus depreciation: P.L. 119-21 made the additional first-year depreciation deduction a permanent 100% for qualified property acquired after January 19, 2025, as described in Notice 2026-11.
• Smaller items: under the de minimis safe harbor, a business without an applicable financial statement can expense items up to $2,500 per invoice or item, through an annual election attached to a timely filed return.

Timing matters. Property is placed in service when it is ready and available for its specific use, so equipment ordered in December but delivered and set up in January generally belongs to 2027. Keep the invoice, delivery record and the date each asset went into use. A deduction lowers taxable income; it does not refund the cost of the purchase.

7. Count inventory and organize the records to keep

If you sell products, take a physical count as close to December 31 as possible, compare it with the books and document damaged or obsolete stock. For tax years beginning in 2026, a business with average annual gross receipts of $32,000,000 or less over the prior three tax years meets the gross receipts test that opens some simpler accounting options; whether they fit your business is a question for your accountant.

Then gather the year in one place:

• Bank, card and loan statements for all twelve months.
• Sales records, invoices and processor reports, including any Forms 1099-K you receive.
• Expense receipts, mileage logs and support for travel and meals.
• Payroll reports, Forms 941, 940, W-2 and W-3, and Florida RT-6 reports.
• Forms W-9, copies of every 1099 you issue, and purchase documents for equipment.

The IRS record retention guidance generally calls for 3 years; 6 years if income over 25% of the gross income shown went unreported; and 7 years for a claim for a loss from worthless securities or a bad debt deduction. Employment tax records are kept at least 4 years after the tax is due or paid, whichever is later, and property records until the limitations period expires for the year you dispose of the property.

Frequently asked questions

Sources

General information, not tax, legal or immigration advice for your situation. Figures and dates were checked on official sources on the date shown and can change; a licensed CPA has not yet reviewed this draft. MTroncone CPA is not affiliated with the IRS or any government agency.