Year-End Tax Checklist for Indiana Small Business Owners

Snapshot

• Start with clean books — they’re the foundation for everything. Reconcile bank accounts, categorize expenses, and clean up any missing or personal transactions before tax season hits.

• Review payroll and contractor info now, not later. Confirm employee and contractor details, check year-to-date wages, and verify all payroll tax payments before W-2s and 1099s are due.

• Know your tax deadlines — and don’t miss them.

• Plan asset purchases and deductions before December 31. Buying equipment or paying bonuses now can reduce your tax bill — but Indiana’s rules on depreciation and deductions differ from federal ones.

• S Corp owners must pay themselves a “reasonable” salary.

• Don’t wait until March to find out how your business did. Up-to-date numbers help you make smart year-end decisions, avoid penalties, and start the new year with clarity.

For Indiana small business owners, the end of the year can feel like a race against the clock. The deadlines, the paperwork, and the worry of an unexpected bill all pile up. It is a time when business owners try to juggle day-to-day operations while also figuring out what the government might expect from them soon.

If this sounds familiar, you are not alone. But here is the good news: when you prepare early and know what to expect, you reduce the risk of penalties, last-minute stress, and cash flow problems. Think of it as your opportunity to stop the tax-time chaos before it starts.

This checklist will help you finish strong and start the new year with more clarity, fewer headaches, and better decisions.

Gather and Reconcile Your Financial Records

Start here. Every year-end tax checklist should begin with making sure your books are clean and your records are up-to-date. Skipping this step risks using incorrect numbers, leading to confusion, missed deductions, and unexpected tax bills.

Think of this step as laying the foundation for everything else. The more accurate your records are now, the easier it will be to close out the year and get ready for income tax time.

Here is what to gather and check:

• Bank statements and credit card statements (reconcile each one to your accounting records)
• Income records (everything should be properly entered and categorized)
• Business expenses (label each one correctly in your accounting system)
• Outstanding bills or unpaid invoices
• Any business expenses paid personally (get reimbursed and record them)

Clean records will help you get reliable financial reports and avoid overstating or understating your profit, which directly affects how much tax you may owe.

Review Payroll and Contractor Information

The end of the year is the perfect time to review your payroll records and make sure everything lines up before reporting deadlines hit in January. Taking time now to check for errors can save you from rushed corrections, frustrated employees, or penalties from tax agencies.

Accurate payroll information is not just about filing W-2s or 1099s—it also helps your tax withholdings, payments, and reports be complete and correct.

Items to review:

• Employee names, addresses, and Social Security numbers
• Year-to-date wages and taxes withheld
• Payments to independent contractors who may need a 1099-NEC
• Payroll tax payments (confirm that you paid each one on time)
• Local tax rates, including Indiana county income tax updates

Cleaning up payroll now helps avoid last-minute problems and helps you meet your filing requirements without stress or surprises.

Prepare for Federal and Indiana State Tax Filings

Each type of business has its own filing requirements. If you are not sure which ones apply to you, this is a great time to ask your accounting support team.

Key filing deadlines:

In addition to preparing your tax return, take time now to confirm whether you need to make a fourth-quarter estimated payment (due January 15).

Also, consider whether your business should make an Indiana entity-level tax payment before year-end. Indiana allows businesses to pay state income taxes directly, which creates a credit on the owner's personal income tax return. To count this payment as a business deduction, it must be made before December 31.

Check Fixed Assets and Depreciation

If you're thinking about buying new equipment or vehicles, or upgrading your business space, year-end is a great time to do so. These types of purchases may qualify for tax deductions that lower your taxable income, but only if you follow the rules.

Here is how it works:

• The IRS allows depreciation deductions for qualified purchases, such as equipment, furniture, and leasehold improvements.
• Section 179 lets you deduct up to about $2 million in equipment purchases in the year they were placed in service.
• To take the deduction for this year, the item must be both purchased and in use by December 31.

Indiana, however, handles depreciation differently:

• The state does not allow federal bonus depreciation, which means you may not be able to deduct the full amount on your Indiana return.
• Indiana caps Section 179 deductions at $25,000, even if you claimed more on your federal return.
• Any difference between your federal and Indiana depreciation amounts will carry forward and reduce income in future years.

If you are planning to invest in your business, this is the time to make smart, well-timed decisions. The right purchases—handled properly—can help you reduce your income tax burden and set your business up for success next year.

Don’t Miss Valuable Deductions

Many small businesses overlook simple, legal deductions that could reduce how much income tax they owe. If your profit is higher than expected this year, now is the time to review your expenses and see if there are smart, justifiable ways to reinvest in your business.

Making qualified purchases in December can help lower your taxable income—as long as the expenses are ordinary, necessary for your business, and properly documented.

Common deductions to review before year-end:

• Software subscriptions and tech tools
• Office equipment or business vehicles
• Supplies for the new year (purchased in December)
• Employee bonuses or benefits (run bonuses through payroll)
• Repairs or improvements to your workspace
• Reimbursed personal expenses related to the business

Taking a closer look at these areas now can help you make smart decisions, reduce your tax bill, and support a stronger start to next year.

Evaluate Owner Compensation

If your business operates as an S Corporation, you must pay yourself a reasonable salary as required by the IRS. This salary must reflect the value of the work you perform for the business. It cannot be too low or skipped in favor of only taking owner distributions.

What counts as “reasonable”? It depends on the kind of work you do. For example, if you're running daily operations, managing staff, or providing services, your compensation should reflect what you would have to pay someone else to do that job.

Before the end of the year, make sure you:

• Paid yourself a salary that fits your role
• Paid in enough taxes through payroll withholdings
• Did not rely only on distributions to cover personal income needs

If the IRS thinks your salary was too low, it could reclassify distributions as wages and assess penalties. Review your compensation and adjust if needed before year-end.

Prepare for Early-Year Compliance Deadlines

You do not want to start the year behind. Several important deadlines follow closely on the heels of the new year.

Mark these dates on your calendar:

• December 31: Deadline for Indiana entity tax payment to be deductible
• January 15: Q4 estimated taxes due (if required)
• January 31: W-2 and 1099-NEC forms must be filed and sent
• March 15: S Corporation and Partnership tax returns due
• April 15: Sole Proprietor returns due

Each of these has financial consequences if missed. Creating a simple calendar or reminder system now can save you major frustration later.

Know Where You Stand Before It Is Too Late

One of the most common mistakes small business owners make is waiting until it is too late to prepare. If you do not know how much profit your business made this year, it becomes almost impossible to make smart decisions.

When your books are accurate and up to date, you can:

• Avoid surprises when it is time to file your income taxes
• Make informed purchases and business decisions
• Keep cash flow strong during a busy or slow start to the new year
• Communicate clearly with your accounting support team

There is still time to act before the year ends.

Take the Stress Out of Tax Time

Owning a business already comes with enough stress. When it comes to income taxes, payroll filings, and keeping your records in order, a little preparation now can prevent a lot of headaches later.

At TMA Accounting, we help small business owners across Indiana stay on track, avoid penalties, and make better decisions. Our team can help with:

• Monthly bookkeeping and financial reports
• Clean-up and catch-up services
• Payroll support and filings
• Income tax filing for both business and individual returns
• Help prepare for income tax time so you know what to expect

We believe running a business shouldn’t feel like a guessing game. When you work with a team that understands small businesses, you can spend more time growing your company and less time worrying about tax forms.

You don’t have to figure it all out on your own.

Schedule a call with us today. Let’s make this the year income tax time feels manageable.

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