5 Cash Flow Moves to Make Before Year-End to Reduce Your Tax Burden
(A CFO’s Guide to Smarter Year-End Planning)
As tax season approaches, many business owners focus on finding last-minute deductions or scrambling to close the books. For financially savvy businesses, tax planning is not just about reducing what you owe. It is about strategically managing cash flow to strengthen your position going into the new year.
At our firm, we take a CFO-level approach to year-end planning. That means helping our clients in Albany, the Hudson Valley, the Tri-State area, and across the country make decisions that protect both their tax position and their cash flow.
Here are five smart moves your business can make before year-end to reduce your tax burden and start the new year stronger.
1. Review Timing on Income and Expenses
One of the simplest and most effective ways to manage taxes is by controlling when income and expenses are recognized.
If your business uses cash-basis accounting, you may have flexibility in timing revenue and deductions.
Examples:
Delaying invoicing large clients until after year-end to defer taxable income
Accelerating expenses such as software renewals or supply purchases into the current year
Accrual-basis businesses can also benefit from timing strategies, although the focus shifts to when services are performed and when payables are recorded.
CFO insight: The goal is not just lowering your tax bill. The goal is ensuring these timing decisions do not cause a cash shortage in Q1. Forecasting matters.
2. Evaluate Equipment and Asset Purchases
If you have been considering buying equipment, vehicles, or technology, year-end may be a strategic time to do so. Section 179 deductions and bonus depreciation may allow you to expense qualified purchases immediately rather than depreciating them over several years.
However, purchasing assets purely for the tax deduction can be a mistake if it strains your cash reserves.
CFO insight: Before buying, build a cash flow projection to understand the impact. A CFO helps you evaluate whether the purchase strengthens both operations and liquidity.
3. Clean Up Accounts Receivable and Payables
Uncollected invoices and unentered vendor bills distort your financial picture and create unnecessary challenges at tax time.
Before year-end, businesses should:
Follow up on outstanding invoices
Write off uncollectible debts
Ensure all vendor bills are entered and accurate
CFO insight: A clean A/R and A/P ledger results in more accurate cash flow visibility and more reliable year-end financials. This is also essential if you plan to seek financing or expand operations next year.
4. Fund Retirement and Employee Benefit Accounts
Contributions to retirement plans such as SEP IRAs or 401k plans, as well as HSA contributions, can reduce taxable income while strengthening long-term stability for both owners and employees.
If you have staff, year-end bonuses or profit-sharing contributions are also deductible and help reinforce team satisfaction heading into the new year.
These contributions should be planned, not reactive. A CFO can determine the optimal contribution amount that maximizes deductions without harming cash flow.
5. Build or Revisit Your Cash Flow Forecast for Q1
When the year closes, many owners turn their attention entirely to tax filings. The most strategic move, however, is looking ahead. A 13-week cash flow forecast helps you anticipate how tax payments, vendor obligations, and customer payments will affect your liquidity early in the year.
CFO insight: Forecasting is where CFO strategy provides the most value. With a clear roadmap, you can make informed decisions about hiring, spending, and reinvesting profits.
Bringing It All Together
Tax planning is not just a CPA function. It is a strategic CFO discipline that aligns financial data, business goals, and cash flow management. When you take a proactive approach, you are not only preparing for tax season. You are building a stronger foundation for growth in the new year.
How We Can Help
We help businesses in Albany, the Hudson Valley, the Tri-State area, and nationwide strengthen their financial systems, forecast cash flow, and plan strategically for taxes and long-term growth.
If you are ready to improve your cash flow before tax season and make confident, data-driven decisions:
