End-of-Year Financial Preparation: A Guide to Streamlining Your 2025 Tax Season

Financial ServicesTaxesAccounting
Written By Kai Bates

As the end of the year approaches, it’s the perfect time to get your personal and small business finances in order. At LMTG, we know tax season can feel daunting, but with some preparation now, you can make the filing process in 2025 much easier. Here are some practical, professional steps you can take to simplify tax time and set yourself up for financial success.

1. Organize and Gather Financial Documents

Start by gathering all essential financial documents in one place. This includes receipts, invoices, bank statements, mileage logs, and any other paperwork that provides a complete view of your year in finances. For small business owners, also pull together:

  • Profit and Loss Statements

  • Expense Reports

  • 1099 Forms (for contractors)

  • Payroll Records

Having your documents organized now will save you from last-minute stress and ensure you don’t miss any critical details.

2. Reconcile Accounts

Reconcile your bank and credit card accounts to make sure your records align with your financial institution’s statements. Catching inconsistencies early can prevent potential issues during tax filing. Accounting software like QuickBooks or similar tools can streamline this process, making it easier to identify any errors or discrepancies.

For individuals, reconciling accounts can help ensure you don’t overlook any deductible expenses or income sources. For business owners, verifying revenue and expenses will help ensure your tax return is as accurate as possible.

3. Review Year-End Tax Deductions

The end of the year offers opportunities to take advantage of potential tax deductions and credits. Some deductions to consider:

  • Charitable Contributions: If you’re planning to make any charitable donations, doing so before the year’s end can provide tax benefits.

  • Home Office Deduction: For those working from home, a portion of expenses like rent, utilities, and internet may be deductible.

  • Business Equipment and Supplies: Certain business-related purchases may be tax-deductible if bought before December 31.

If you’re a business owner, assess if there are any larger purchases or upgrades, like equipment or software, that could be beneficial. These investments can help grow your business while providing potential tax benefits.

4. Evaluate Retirement Contributions

Contributing to retirement plans is a valuable step both for your financial future and your tax return. Maxing out contributions to an IRA or 401(k) can lower your taxable income. Small business owners may want to consider SEP IRAs or Solo 401(k)s, which allow higher contributions and offer significant tax benefits.

5. Estimate Your Tax Liability

Estimating your tax liability before year-end helps you avoid surprises. Use IRS calculators to get a general idea of what you might owe or receive in a refund. If your estimated tax liability is higher than expected, consider making an estimated payment now to avoid potential penalties.

6. Prepare to Issue 1099s

For small business owners who hired contractors this year, make sure you’re prepared to issue 1099 forms to any freelancers or contractors you paid over $600. You’ll need to issue these by January, so verifying details and gathering information now will help you stay compliant.

7. Review Your Financial Goals and Plan for the New Year

Take some time to review your financial goals and progress from the past year. Assess where you’re at with cash flow, investments, and any financial goals you set. For business owners, think about your strategies for growth, profitability, and sustainability in the coming year.

8. Seek Professional Guidance

Tax laws change regularly, and what worked last year might not apply this year. If you’re unsure about deductions or the best way to prepare, consider consulting a financial professional. Here at LMTG, we’re ready to help with personalized advice that can maximize your financial health and minimize your tax burden.

By preparing now, you’ll set yourself up for a more organized and less stressful tax season in 2025. Taking these steps can help you feel confident and well-prepared, allowing you to focus on what matters most as you look ahead to the new year.

Need help with any of this? Reach out today!

Kai Bates