Things Business Owners Should be Aware of Before Year-End: Tax Preparation, Tax Projections, and Tax Planning

The end of the year is here again, which means it’s almost time to file taxes. So, let’s dig into three key tax terms that can make or break your year-end finances: tax preparation, tax projections, and tax planning.  

1. Tax Preparation

Tax preparation is exactly what it sounds like—the process of preparing your tax return. It includes gathering your tax and business records, getting your receipts and reports in order, and putting the pieces together so that you or your tax preparer can file your tax return. If you’ve been on top of things throughout the year, this part is manageable. But if you’re digging through a shoebox of receipts in March, well, you might be in for a late night or two. 

What to Know: 
Tax preparation is not optional. You’re looking at what happened after the fact, getting it all down on paper, and sending it off to the IRS. There’s not much you can do to change your tax liability at this point. If this stage feels frantic, consider making record-keeping a regular monthly routine next year. Future you will thank you when tax season rolls around. 

2. Tax Projections

Tax projections are all about estimating what your tax bill might look like based on the current year’s numbers. This forecast helps you plan for what’s coming and (hopefully) avoid a year-end “surprise” bill that drains your account. 

What to Know: 
Projections are about getting ahead of your tax bill. They don’t change your numbers, but they give you a heads-up, helping you budget for what you’ll owe or get back. 

3. Tax Planning

Tax planning is about making strategic moves that could actually lower what you owe. While tax preparation reacts to what’s already happened, tax planning sets you up for what’s to come. 

What to Know: 
This is where proactive steps—like optimizing deductions, timing your income, or adjusting your payroll—can help you control your tax situation. If tax preparation is like cramming for the final, tax planning is like studying throughout the semester. It doesn’t mean you won’t have work to do, but you’ll be a lot less stressed when the due date arrives. 

How They All Work Together 

Each of these plays a different role, but they’re most effective when used together. Here’s a typical tax strategy: 

• Tax Projections give you a clear idea of what to expect. 

• Tax Preparation gets your tax filing done on time and accurately. 

• Tax Planning helps reduce what you’ll owe next year. 

Doing all three can feel like a lot, but ignoring taxes only makes things harder and more expensive. Even if taxes aren’t your thing, a bit of attention before year-end can make tax time far less painful. 

If you need help, reach out today to get on track. Because no one likes to play catch-up when it comes to taxes—especially the IRS.