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As the calendar winds down, high-net-worth owners of family-run businesses face a pivotal opportunity to protect their legacy, improve cash flow, and align their business and personal financial goals. These year-end money moves can shape your tax outcomes and long-term wealth.
This guide serves as your financial planning checklist to help you prioritize decisions that can reduce your tax liability and strengthen your family’s financial future. By leveraging proven techniques such as income deferral, expense acceleration, charitable giving, and installment sales, families can take meaningful steps toward preserving generational wealth.
Below are seven essential strategies to consider before December 31st:
The timing of income and expenses can significantly impact your tax liability. Writing off bad debts before year-end and delaying income receipt into the next tax period can reduce taxable income for the current year.
Additionally, review any outstanding invoices and determine whether delaying collection or accelerating vendor payments could offer a tactical advantage. Thoughtful timing decisions like these can help optimize your financial position and reduce risk.
Depending on your accounting method, you may be able to accrue liabilities to capture deductions now. This is relevant for businesses using the accrual method, where expenses can be recorded before they’re paid. Common examples include accounts payables for goods and services received by year-end but not yet paid, salaries earned by employees, and rent that has accrued but is not due until after year-end.
Bonuses to owners can be a powerful tool to manage taxable income. It’s important to be mindful of personal thresholds and phase-outs for tax benefits, and to consider how bonuses can be timed and structured to reduce overall liability.
When thoughtfully planned, bonuses can serve as a dual-purpose wealth planning tool by rewarding performance while enhancing tax efficiency.
Cash basis taxpayers may benefit from prepaying SALT in December. This allows them to capture state tax deductions at the federal level for the current year, potentially lowering their federal tax bill. Now that the SALT deduction cap has temporarily increased from $10,000 to $40,000 for 2025 and new phase-outs for high earners are adding complexity, it’s important to analyze whether a taxpayer’s total SALT payments will exceed the cap and whether a pass-through entity (PTE) election is a viable workaround.
PTE regimes (available in many states) allow state taxes to be paid at the entity level, making them fully deductible for federal purposes and bypassing the individual SALT cap. The final version of the One Big Beautiful Bill Act (OBBBA) preserved full deductibility of PTE payments, making this strategy especially valuable for high-income taxpayers in high-tax states.
For high earners, accelerating donations before the end of 2025 can offset income and reduce personal tax liability. Currently, itemizers can currently deduct up to 60% of adjusted gross income (AGI) for cash gifts and 30% for noncash assets. For tax years beginning after December 31, 2025, new limitations included in the OBBBA could reduce the tax deductions received for charitable giving.
For more insights, read our article on making the most of your giving strategy in 2025.
Switching to or leveraging the cash method of accounting can offer flexibility in deferring income. This might include delaying billing, deferring interest income, or postponing service billings until the next tax year. Evaluate whether a change in accounting method is feasible and beneficial on an annual basis or every few years. This approach helps to smooth income and manage tax brackets over time.
Installment sales allow you to recognize gains over multiple years, helping to manage tax liability more evenly. This is especially useful when selling assets or business interests.
For example, if a business owner sells a stake in the company for $1 million, instead of receiving the full amount upfront, they could structure the sale to receive $200,000 annually over five years. This spreads the taxable gain across multiple tax periods, potentially keeping the owner in a lower tax bracket each year and reducing overall liability.
Year-end tax planning for a family-owned business requires precision and foresight. Our High-Net-Worth team can help you evaluate these strategies in the context of your unique goals and entity structure. We specialize in helping high earners preserve wealth through intentional planning and execution.
Contact us today to explore tax-smart moves tailored to your goals.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
