Year-End Financial Moves Every Therapist Should Know

December tends to bring a mix of reflection, fatigue, and loose ends. And for private practice owners, year-end financial tasks can feel like yet another item on an already full plate. But a few focused, well-timed decisions in the coming weeks can meaningfully reduce your tax liability, ease the transition into next year, and help you feel more in control. The goal here isn’t necessarily to do more, but to help you focus on the right things and ignore the rest.

What to Do Before December 31^st

Here are some simple but high-impact actions:

Prepay predictable 2026 expenses—selectively. If you know that you’re going to need a new laptop at some point in the coming year, you might as well purchase it now and get the tax deduction this year. If you wait to buy the laptop in January, you have to wait another whole year to get the tax benefit. Apply this methodology to any other expense you see coming down the pike, but be careful not to spend for the sake of spending (more on that in the “What Not to Do” section below).

Fund your retirement account. Some retirement plans, like 401(k)s, must be open and funded in 2025 in order to get a deduction for the current year. Others, like SEP IRAs, can be funded up until the due date of your tax return. Consult with your CPA and/or Financial Advisor to find out what your current setup allows and contribute as much as is practical. For a more in-depth look at retirement plans for private practices, read Which Retirement Plan Should You Choose?

Speak with your CPA now, not later. Let’s face it: CPAs aren’t exactly known for their sparkling personalities and effective communication skills, even on a good day. Trying to have a meaningful conversation with a CPA during tax season (~February – April 15) is even less likely. Don’t wait until tax season to raise important questions. If you’re unsure about income deferral, large purchases, retirement contributions, or how much you might owe, schedule a call now while there’s still time left in the year to make changes. Many strategies close on December 31, and your CPA can only help if they know what’s happening in time.

What Not to Do

Some mistakes are common, but costly.

Don’t spend just to get a “write-off”. A business deduction reduces taxable income, but it still costs real money. If you buy a $1,000 laptop you don’t actually need, you might save $200–$300 in taxes, but you’re still out $700–$800. Every purchase should be grounded in long-term business need, not short-term tax avoidance.

Don’t rush into an S-Corp setup in December. An S-Corporation can offer tax advantages, but only when it’s implemented correctly, and with sufficient income to justify the added complexity. Switching to an S-Corp means updating payroll systems, W-2 filings, and bookkeeping processes—each of which requires planning. If an S-Corp election is right for you, it should be done with ample time left in the year to make the necessary adjustments. December is rarely the ideal month to initiate this large structural change.

Don’t make estimated tax payments based solely on the previous year’s income. Your practice might have grown since last year. Or you may have taken time off for family or personal reasons. There are countless reasons why your income might have changed from the previous year, and making estimated tax payments based solely on your 2024 income will likely miss the mark. Inaccurate payments lead to one of two outcomes. Either you didn’t pay enough (you’re in for a surprise tax bill in a few months) or you paid too much (you have strapped yourself needlessly and now have to wait for the IRS to send you a refund). Your estimated tax payments should be based on what’s actually happening in the current year, not what you did last year.

Setting the Stage for a Stronger 2026

Here’s how to make your next year easier.

Create an October/November calendar reminder to meet with your CPA (next year). October and November are the ideal months to meet and plan with your CPA. Enough of the year has passed to get a feel for your tax trajectory, but there’s still enough time left in the year to make changes. A 30-minute meeting in Q4 can have more impact than hours of scrambling in Q1.

Review and clean up your 2025 books. Accurate, organized books are the foundation for pretty much every other financial item in your practice. Whether you handle your bookkeeping or outsource it, take time now to reconcile accounts, update categories, and flag any discrepancies. If your current system has caused delays or confusion, now is the time to fix it before the new year begins.

Adopt one better system. This could mean switching to a mileage-tracking app, using a digital receipt manager, or hiring a bookkeeper. You might have multiple financial items on your to-do list, but there’s no need to overhaul everything at once. Just choose one improvement that will eliminate a source of friction in the coming year and pat yourself on the back for the progress.

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Year-end financial planning doesn’t require an overhaul or hours you don’t have. It requires a few deliberate actions, awareness of common mistakes, and perhaps one new system to make next year easier. When you approach your practice finances with the same intentionality you bring to clinical work, the payoff extends far beyond April 15^th. The background anxiety eases. The surprises disappear. You’re no longer managing in reactive mode, but working from a place of clarity and control. And that shift from scrambling to stability creates the bandwidth for what matters most: showing up fully for your clients, your family, and yourself. Happy Holidays!