Preparing for Year-End: Why October Is the Best Time to Start Tax Planning

A Freedom Tax & Accounting Guide

The final quarter of the year is here.

Between fall activities, school schedules, business demands, and the approaching holiday season, the next few months have a way of disappearing quickly. And while tax season may still feel far away, October is one of the best times to start thinking about it.

Why?

Because tax preparation happens after the year is over. Tax planning happens while you still have time to make decisions.

By October, you have nine months of income, expenses, and financial activity to review. You likely have a good idea of how the year is shaping up—and you still have time before December 31 to address areas that may need attention.

Here are a few things individuals, families, and small business owners should consider as we head into the final quarter of the year.

1. Review Your Year-to-Date Income

Start with a simple question:

Is this year turning out the way you expected financially?

For individuals and families, consider whether your income or financial situation has changed since January.

Maybe you:

• Changed jobs

• Received a raise or bonus

• Started freelance or contract work

• Added another source of income

• Experienced a major life change

For business owners, October is a great time to compare year-to-date revenue and expenses with your expectations for the year.

Look at what’s changed and what the final few months could mean for your overall financial picture.

You don’t need to know exactly how December will end. The goal is to identify significant changes now so you have time to respond.

2. Review Your Tax Withholding or Estimated Payments

Nobody wants to discover an unexpected tax bill when it’s time to file.

If your income or household situation has changed, now is a good time to review your paycheck withholding or estimated tax payments.

This can be especially important if you:

• Are self-employed

• Own a small business

• Have multiple sources of income

• Changed jobs during the year

• Experienced a significant increase in income

• Had a major change in your household

If adjustments are appropriate, addressing them now may help reduce surprises later.

3. Check Your Retirement Contributions

How are those retirement goals looking?

October is a good time to review how much you’ve contributed so far and discuss whether additional contributions make sense for your financial situation.

Depending on the type of retirement account you have, contributions may also affect your tax situation.

Self-employed individuals and business owners may have additional retirement planning considerations as well.

Contribution limits, eligibility requirements, and deadlines can vary, so talk with your tax and financial professionals about the options that apply to you rather than waiting until the final days of the year.

4. Get Your Business Books Up to Date

If you own a business, this is a big one.

Accurate bookkeeping is the foundation of good tax planning.

If you’ve fallen behind on entering expenses, reconciling accounts, tracking receipts, or reviewing financial statements, use October to get caught up.

Your books should give you a clear picture of:

• Year-to-date income

• Business expenses

• Payroll

• Contractor payments

• Equipment and asset purchases

• Outstanding invoices

• Overall business performance

Clean books aren’t just helpful for preparing your tax return. They give you the information you need to make better business decisions before the year ends.

5. Start Thinking About Year-End Business Purchases

Need new equipment? Technology? Office furniture? Tools or other business assets?

Before making a large purchase simply because the calendar is approaching December 31, stop and ask two questions:

Does my business actually need this?

And:

What are the tax implications of making the purchase this year versus next year?

A purchase should make good business sense first. Potential tax benefits are only one part of the decision.

Talking with your accountant before making a significant purchase can help you understand how the timing may affect your particular situation.

6. Review Your Charitable Giving

If charitable giving is part of your year-end plans, October gives you plenty of time to be intentional about it.

Review what you’ve contributed so far and think about any additional organizations or causes you’d like to support before the end of the year.

Just as importantly, keep good records of your contributions.

Rules can differ depending on the type of donation and your individual tax situation, so your tax professional can help you understand the documentation you may need and how your charitable giving fits into your broader tax picture.

7. Tell Your Accountant About Major Life Changes

Your tax return reflects much more than your income.

Think about what’s happened in your life this year.

Did you:

• Get married or divorced?

• Welcome a child?

• Buy or sell a home?

• Start a business?

• Become self-employed?

• Change jobs?

• Retire?

• Sell investments or other significant assets?

These events can have tax implications, and your accountant may not know they’ve happened unless you tell them.

Having that conversation in October provides an opportunity to identify questions or planning considerations before tax season arrives.

8. Look Ahead to the Rest of the Year

Once you understand where you stand today, look at what’s coming between now and December 31.

Are you expecting:

• A year-end bonus?

• Additional business revenue?

• A major business expense?

• A retirement contribution?

• A charitable gift?

• A large purchase or sale?

• Another significant financial event?

Looking ahead allows you and your accountant to consider the full picture rather than reacting after the year has already closed.

9. Schedule a Year-End Tax Planning Conversation

One of the most valuable things you can do this fall is simply have a conversation with your accountant.

Don’t wait until you’re dropping off your tax documents next year to ask:

“Was there anything I could have done differently?”

By then, some opportunities may have already passed.

A year-end tax planning conversation gives you the chance to review what’s happened so far, discuss what’s coming next, and determine whether there are actions worth considering before December 31.

Every individual, family, and business has a different financial situation. That’s why personalized planning matters.

Your October Financial Challenge

This month’s challenge is simple:

Spend 30 minutes reviewing your financial year so far.

Gather:

• Your most recent paystub or year-to-date income information

• Updated business financials, if applicable

• Estimated tax payments you’ve made

• Retirement contributions

• Information about major life or financial changes

• A list of significant purchases or decisions you’re considering before year-end

Then write down the questions you want to discuss with your accountant.

You don’t need to figure everything out yourself. The important thing is to start the conversation while there’s still time to act.

Don’t Wait for Tax Season to Think About Taxes

At Freedom Tax & Accounting, we talk a lot about the importance of looking beyond tax season.

That’s because some of the most important tax decisions happen before your return is ever prepared.

October gives you something valuable: time.

Time to organize your records.

Time to understand your numbers.

Time to ask questions.

And time to make informed decisions before the year comes to a close.

At Freedom Tax & Accounting, we’re here to help individuals, families, and small business owners understand where they stand and prepare for what’s ahead.

Ready to start your year-end tax planning?

Contact Freedom Tax & Accounting to schedule a conversation. We’ll help you review your financial picture and identify the areas worth addressing before December 31.