Small Business Tax Tips for New Haven Owners: 7 Moves to Make Before Year-End

New Haven, Connecticut : Jose’s Tax Service : September 17, 2026

September is the correct time to review your 2026 tax position. The September 15 federal estimated tax deadline has passed, but year-end planning remains available. You can still adjust deductions, retirement contributions, equipment purchases, payroll, and bookkeeping before December 31.

Use the following seven moves to prepare your New Haven business for year-end. Each action should be coordinated with your business structure, projected income, cash flow, and Connecticut filing obligations.

1. Recalculate Estimated Taxes Now!

The third federal estimated tax payment for 2026 was due September 15, 2026. If you are self-employed or operate a pass-through business, do not wait until filing season to review the payment.

Use Form 1040-ES, Estimated Tax for Individuals, to update your federal projection. The IRS generally requires estimated payments when both conditions apply:

1. You expect to owe at least $1,000 after withholding and refundable credits.
2. Your withholding and credits will be less than the smaller of:
   • 90% of your projected 2026 tax, or
   • 100% of your 2025 tax, subject to the higher-income rule.

Review the following items:

• Year-to-date gross receipts.
• Business expenses paid through August.
• Expected fourth-quarter revenue.
• Federal and Connecticut estimated payments already made.
• Owner draws and withholding from other employment.
• Health insurance, retirement, and other above-the-line deductions.

The fourth federal estimated payment is generally due January 15, 2027. You may not need to make that payment if you file your 2026 federal return by February 1, 2027, and pay the balance due in full. Underpayments may lead to an estimated tax penalty.

Connecticut pass-through entities should also review Form CT-PET ES, Estimated Connecticut Pass-Through Entity Tax Payment Coupon. The Connecticut Department of Revenue Services (DRS) requires eligible pass-through entities to make estimated payments electronically. The September 15 installment was also relevant for Connecticut pass-through entity tax planning.

Review the IRS Form 1040-ES instructions and the Connecticut DRS pass-through entity tax information.

2. Model the Qualified Business Income Deduction!

Many owners of sole proprietorships, partnerships, limited liability companies (LLCs) taxed as partnerships, and S corporations may qualify for the Qualified Business Income (QBI) deduction, also known as the Section 199A deduction.

The deduction may allow an eligible owner to deduct up to 20% of qualified business income. The final amount can be limited by taxable income, W-2 wages, qualified property, business type, and other statutory requirements.

Before year-end, complete these steps:

1. Project your 2026 business income.
2. Separate qualified business income from wages, investment income, and other non-QBI items.
3. Review owner compensation and W-2 wages if the business is an S corporation.
4. Calculate the effect of retirement contributions, health insurance deductions, and equipment purchases.
5. Prepare a preliminary Form 8995, Qualified Business Income Deduction Simplified Computation, or Form 8995-A, Qualified Business Income Deduction.

The IRS states that QBI is generally based on the net amount of qualified income, gain, deduction, and loss from an eligible domestic trade or business. Certain deductions, including qualified retirement plan contributions and the deductible portion of self-employment tax, may affect the QBI calculation.

Do not assume that every deduction increases the QBI deduction. Some deductions reduce both taxable income and the QBI calculation. Use the IRS QBI guidance and Form 8995 resources when modeling the result.

3. Review SEP-IRA and Solo 401(k) Contributions!

Retirement contributions can reduce current taxable income while strengthening your long-term financial plan. The correct option depends on your entity type, employees, compensation, and desired contribution level.

Consider the following:

• SEP-IRA: A simplified option for many self-employed individuals and small businesses. Employer contributions are generally based on compensation or self-employment earnings. Eligible employees may need to receive contributions under the plan’s terms.
• Solo 401(k): A potential option for an owner-only business or a business operated by the owner and spouse. It may permit both employee elective deferrals and employer profit-sharing contributions.
• Traditional IRA: A separate retirement savings option that may be available depending on income, filing status, and access to an employer retirement plan.

Complete the following actions before year-end:

1. Determine whether your plan must be established by December 31.
2. Confirm employee eligibility requirements.
3. Calculate the maximum allowable contribution.
4. Coordinate the contribution with your QBI projection.
5. Document the contribution deadline and payment method.

Do not open a plan solely to create a deduction. A retirement plan should be reviewed as part of your broader compensation and tax strategy. Contributions must be properly documented and reported.

4. Plan Equipment Purchases Carefully!

Section 179 and bonus depreciation may allow a business to recover the cost of qualifying equipment more quickly. The property generally must be acquired and placed in service during the applicable tax year.

Potentially qualifying property can include:

• Computers and business technology.
• Machinery and tools.
• Office equipment.
• Certain furniture.
• Business-use vehicles, subject to specific limitations.
• Other eligible tangible property.

Before purchasing equipment, compare:

1. The expected business use.
2. The cash cost and financing terms.
3. The Section 179 treatment.
4. The applicable depreciation rules.
5. The effect on QBI.
6. The effect on Connecticut income and pass-through entity tax planning.

Do not purchase equipment solely for a tax deduction. A deduction does not eliminate the cost of the asset. Confirm the current 2026 limits, placed-in-service requirements, business-use percentage, and depreciation treatment before signing a purchase agreement.

5. Complete Your Mileage and Home Office Records!

Vehicle and home office deductions require consistent documentation. Reconstructing records in March can be difficult and may weaken your position if the IRS requests substantiation.

For mileage, maintain a contemporaneous log showing:

• Date of each trip.
• Business purpose.
• Starting point and destination.
• Business miles.
• Total vehicle mileage.
• Client or project associated with the trip.

Choose between the standard mileage method and the actual expense method only after comparing the available records and applicable rules. Switching methods may be limited depending on how the vehicle was first treated.

For a home office deduction, confirm that the space is used regularly and exclusively for business. Measure the office area. Preserve records for rent, mortgage interest, utilities, insurance, repairs, and other allocated costs if you use the actual expense method.

Your Business Deductions Cheat Sheet can help organize this review.

6. Evaluate Family Payroll and Your Business Entity!

If your spouse or children perform legitimate work for the business, review whether formal payroll is appropriate. The work must be real. Compensation must be reasonable. Duties, time, pay rate, and payroll records must be documented.

For children, payroll treatment can depend on the business structure and the child’s age. Certain payroll tax exceptions may apply when children work for a parent’s sole proprietorship or a partnership owned only by the child’s parents. Those exceptions do not apply uniformly to corporations.

For a spouse, review:

• Job responsibilities.
• Reasonable compensation.
• Payroll tax withholding.
• Retirement plan eligibility.
• Workers’ compensation and employment requirements.
• Federal and Connecticut payroll filings.

At the same time, conduct an entity check-up. Compare the current operation of your LLC, sole proprietorship, partnership, or S corporation with your 2027 goals.

Ask:

1. Is the current entity still appropriate?
2. Is an S corporation election being considered for the right reasons?
3. Are reasonable compensation and payroll being handled correctly?
4. Is the entity registered and compliant in Connecticut?
5. Are the administrative costs justified by the expected benefit?

Do not change entity classification based on a simple tax comparison. The analysis should include payroll, Connecticut filings, bookkeeping, legal administration, retirement planning, and cash flow.

7. Close the Books Before December 31!

Clean books are the foundation of accurate tax planning. Unreconciled accounts can cause missed deductions, duplicated expenses, incorrect owner draws, and unreliable estimated tax calculations.

Complete this year-end bookkeeping checklist:

• Reconcile business bank accounts and credit cards.
• Categorize income and ordinary business expenses.
• Separate personal and business transactions.
• Record outstanding invoices and unpaid bills.
• Confirm equipment purchases and loan balances.
• Review payroll reports.
• Match payment processor deposits to sales records.
• Save receipts and supporting documentation.
• Reconcile mileage and home office records.
• Export a year-to-date profit and loss statement.

The Jose’s Tax Service Small Business Learning Center includes resources for QuickBooks setup, business deductions, payroll, compliance, and year-end preparation. Bookkeeping support can also help you maintain accurate records throughout the year instead of correcting several months of transactions at once.

Schedule Your Year-End Tax Planning Review!

September is not too late to improve your 2026 tax position. It is the appropriate time to project income, review deductions, coordinate retirement contributions, evaluate equipment purchases, and correct bookkeeping issues.

Jose’s Tax Service provides personalized tax preparation, Connecticut filing support, bookkeeping, and year-round tax planning for New Haven business owners and self-employed professionals. Appointments are available in person or virtually, with $0 upfront payment and same-day availability when scheduling permits.

Schedule a tax planning appointment with Jose’s Tax Service. Bring your year-to-date profit and loss statement, prior-year return, estimated tax payment records, retirement plan information, mileage log, equipment invoices, and payroll records.

Category: Tax Planning | Tags: small business tax, New Haven business, deductions, tax strategy