Timing your income and expenses can have a substantial impact on taxable income. Accelerating deductible expenses into the current year, while deferring income to the following year, allows business owners to strategically manage their tax liability. For example, prepaying insurance premiums, software subscriptions, or routine vendor services before year-end reduces the current year’s taxable income. Similarly, delaying invoices for services completed at the end of the year allows income to be recognized in the following year, potentially lowering your current-year tax bracket.
Careful planning and documentation are crucial. Coordinating these moves with a CPA ensures compliance with IRS rules while optimizing your financial outcome. Even small adjustments in timing can compound into meaningful savings, particularly for businesses with higher revenue or multiple tax obligations. By treating tax strategy as an ongoing process rather than a last-minute task, owners can reduce stress and improve predictability in cash flow planning.