Friends, I have a confession: on the evening of November 5 at 7:30 PM, I sat down on my sofa to finish the week’s newsletter. Two things were true: I was full of eldest daughter guilt at missing my self-imposed weekly publishing deadline, and I was in possession of a ticket to the last US show of Garbage’s farewell tour, which started at 8:30 PM.

I set down my laptop and chose the Shirley Manson singalong. I regret nothing. (Although my knees might disagree.) 

But, that choice in this very tightly scheduled time of year has put me one topic behind on the 10 Weeks to Close checklist. Which is why this week’s newsletter covers both all things S-corp compliance and why you need a Q4 tax meeting. Go, baby, go go.

As you start to understand small business tax deductions, it can become a game-level obsession to avoid taxes. This will lead someone in your world to say, “Maybe you should be an S-corp.” 

But is that the right decision for you? Let’s dive into how S-corps work.

Do I get extra legal protections? Nope. An LLC and S-corp have exactly the same legal protections. 

Could I get an extra tax benefit? Yes, you may save on self-employment payroll taxes. S-corp owners pay themselves two ways: a “reasonable” W-2 wage and shareholder distributions. While your W-2 wages are subject to the 15.3% tax called FICA, your distributions are not. That’s where the tax savings come from.

Does this save me money? Maybe. It depends on your location, profitability, when and how you pay yourself, and whether you have a savvy tax advisor. First, make sure you’re even allowed to do this in your state or location. If that’s a yes, then you need to ask if you have enough profits to pay a distribution on top of your W-2 wages, operating expenses, retirement savings, and income taxes. 

What are the hidden costs? S-corps have extra administrative tasks like filing a corporate tax return, registering as an employer, staying compliant with more tax agencies, possibly getting workers compensation insurance, and running at least one W-2 payroll per year. You’ll need more support from your tax accountant, and might need upgraded bookkeeping. Evaluate whether your payroll tax savings are more than these additional costs and your administrative time. 

What are some hidden benefits? As a W-2 employee, if your state offers paid family leave or unemployment benefits, you could qualify to participate. (Next year, this will include Delaware, Maryland, Minnesota, and Maine.) For your W-2 wages, your company pays half your payroll FICA tax as a qualified business deduction. And if your state and local taxes are significant, you might be able to use a SALT tax cap workaround through your company. 

If I want to change my election, what do I do? To convert your LLC to an S-corp in 2026, you can request a conversion any time through March 15, 2026. The IRS filing process is straightforward, just a couple of one-page forms, but your state might have some extra requirements. Get ready to behave “as if” and comply with S-corp requirements from January 1. And please, please, coordinate this move with your tax advisor.

Don’t be sucked in by a social media ad touting “four figure” tax savings. Make sure this is the right choice for you, and you actually save. 

If you’re already an S-corp: year-end compliance

If you already are operating as an S-corp, it’s time to make sure you’re fully compliant:

• Now: review your 2025 expected profitability and year-to-date compensation to meet the  “reasonable” W-2 standard and optimize for QBI. What’s “reasonable”? Check out this summary of accepted methods.  

• By December 31: pay out your full 2025 W-2 wage. Check your payroll system’s deadline for direct deposit, which is usually 2-3 business days earlier.

• By January 15: complete federal, state, and local payroll tax filings and payments.

• By March 15: file your S-corp tax return (or take an extension).

• Ongoing: accurately record your distributions on your balance sheet.

If you’d like to use a payroll company, our partner Gusto has an S-corp owner-only payroll that’s pay-as-you-go. They’ll withhold taxes from your payrolls, produce an annual W-2, and file your payroll reports, even if you run just one payroll per year. Here’s my referral link. 

Remember how much you love tax deductions? A bunch of them go away annually on January 1. If you don’t act by December 31, you can’t get them back. 

That’s why you need a fall meeting with your tax advisor. This is your real tax prep, when we have a sense of how the year will close and you still have time to do something about it.

This year in particular, we’re dealing with new tax rules. While the OBBBA was passed in July, most of its changes apply to the full 2025 tax year. What you talked about in March or April might not be correct now. 

Your tax advisor can help you set your compensation, optimize your 20% qualified business income (QBI) allowance, activate your SALT tax workaround, fund the employee portion of your 401k savings (up to $23,500), and revise and correct your estimated taxes to avoid penalties or overpayment. They can help you decide whether it’s worth it to hire your kids or pay your spouse. 

While I didn’t include it on the checklist, here’s an end-of-year accounting prep worksheet. Call your accountant, set a meeting before December 12, and schedule time in advance to organize your financial information.

The government is so back: Speaking of major tax deductions, the IRS released updated 2026 limits for 401ks, IRAs, and HSAs. The business owner max will be $72,000 up to age 50 and $80,000 for those 50+. Employees can contribute $24,500.  If you choose a high-deductible health plan, you can save at least $8,750 per family in an HSA.

beehiiv rollout: Our newsletter platform announced a slew of new features like AI websites and storefronts, native podcast integration, an expanded publisher ad network, and more support for paid service tiers. If you’re looking for a new content platform, use my referral code to get a 30-day free trial plus 20% off for 3 months.

Update your W-9: The IRS is updating the 2026 W-9 form to track revenue from digital assets and cryptocurrency. While it’s ideal to collect a W-9 from each new vendor partner, depending on your business, you may need to request all-new W-9s next year. The new form will be available by January 1.

Last tax thing: Not sure why you need to understand tax and deductions? Rapper 6ix9ine is the latest celebrity facing large penalties for long-term underpayment. He blames his accounting partner for not recording deductions. While a trustworthy accounting partner is a must, you ultimately review and sign the tax returns. Beyond that, I cannot speak to this person’s…anything. The last concert I attended was a shadow AARP recruiting event.