Tax Planning and Preparation Mistakes to Avoid Before the Holidays

The final stretch of the year always seems to come fast, especially in construction. Between pushing to finish jobs, collecting payments, and keeping crews paid, tax planning and preparation can fall to the bottom of the to-do list. But once the holidays hit, there’s usually no catching up.

Missing important steps can leave you with fewer deductions and more stress come January. That’s why looking at a few of the most common year-end tax mistakes makes sense, before you’re caught up in winter shutdowns or year-end rush jobs. A little extra attention now can help your business enter the new year in far better shape.

Avoiding Last-Minute Record Scrambles

Waiting until the last week of December to gather your receipts, invoices, and payroll info creates problems. It’s easy to miss something when you’re rushing, and even harder to get help from an advisor once everyone's on holiday break.

• Messy or late records can cost you tax deductions that would’ve made a real difference

• Inconsistent or incomplete records can lead to wrong filings, which could delay returns or trigger penalties

• Missing job costs or labor records can make it harder to track profitability by project

A better move is to check through your financials now, while there’s still time to fix gaps. Set aside an hour or two at the end of the week to check that everything, from supply receipts to subcontractor payments, is where it should be. The cleaner your books are, the smoother things will go down the line. 

Even if you feel organized, reviewing last year’s process can reveal small mistakes you might want to avoid this time around. Consider putting together a list or spreadsheet to help see what’s still missing, making the process much easier in the weeks ahead.

Forgetting to Plan for Contractor-Specific Deductions

Construction business owners have access to many deductions, but not all of them are obvious. Some require a bit of planning ahead. Mileage logs, section 179 deductions for new equipment, and trailer depreciation are just a few examples we see get skipped in December.

One detail specific to construction is that a cost segregation study could allow you to maximize depreciation deductions, especially if you have recently acquired or renovated property. We specialize in helping contractors identify and document deductions unique to their trade, like those associated with heavy equipment and fleet vehicles.

What trips some of us up is waiting too long. For example, buying equipment early in the year and forgetting to track it properly could result in lower depreciation deductions. Or making that big year-end purchase but missing the filing window altogether. Sometimes, not understanding which purchases qualify or how to document them can cause business owners to miss out on key savings.

Here’s where some owners miss out:

• Not setting aside records for meals and travel tied to job sites

• Failing to track tool purchases separately from general supply costs

• Missing the timing on large equipment buys that could lead to helpful write-offs

These might feel small, but they add up fast. Bringing in a professional before year-end to review your expenses may help uncover deductions you hadn’t considered. A second look at past purchases or an updated log for mileage could mean the difference between a missed opportunity and a significant tax benefit. Knowing which records the IRS looks for also helps tidy your documentation, which can be a relief if you’re ever audited.

Mistiming Income and Expenses

Year-end timing can affect how much you owe, especially if your profit varies from month to month. Getting paid for a job in December might push your revenue high enough to increase your tax bill. Choosing to invoice it in January (if the timing works) could spread the income more evenly.

Contractors working with slim margins in winter need to watch this closely. A project that finishes right at year-end may hike your income without a matching expense if materials were paid months earlier.

Some tips to manage timing better:

• Review your open invoices to see which payments can reasonably be moved to January

• Push to purchase tools or materials before December 31 so the costs align with current income

• Track cash flow over the year to help spot timing issues early

Being thoughtful here can smooth out financial swings and prevent surprise tax bills during your slow season. It’s often worth looking back at your previous year's statements to get an idea of how year-end transactions affected your taxes. If payments seem unusually high or expenses don’t quite line up, flag those for follow-up. 

Some contractors benefit from reviewing their contracts to see if payments can be structured in ways that better match when costs are incurred. Communication with clients about invoicing around the holidays also helps set realistic expectations and avoid future confusion.

Skipping Quarterly Tax Payments or Worker Classification Checks

The final quarter is when mistakes get expensive fast. Some business owners fall behind on estimated tax payments or skip reviewing whether 1099 workers should really be classified as employees. Both can bring unexpected trouble later.

Quarterly payments help keep your tax bill under control. When Q4 gets missed, it can create extra fees or underpayment penalties. That’s not a burden anyone wants to come February.

Meanwhile, classifying someone incorrectly as an independent contractor can come back to bite, especially during audits. If you’re unsure about the rules or haven’t documented the relationship clearly, this is the time to get it right.

We regularly assist construction contractors in Crystal Lake, Illinois, with proper worker classification and quarterly filing deadlines, helping prevent costly IRS scrutiny and audit risks.

Here’s what we suggest checking before the holidays hit:

• Did you already submit your Q4 estimated tax payment? Is it scheduled before the deadline?

• Do you have proper contracts and documentation for any 1099 workers?

• Has your business structure changed this year in a way that affects how you pay taxes?

Fixing these things now beats scrambling in the middle of winter, when weather delays and payment cycles are already tough to manage. If you suddenly realize someone on your team should not have been classified as an independent contractor, correcting it before issuing year-end tax forms is far easier than having to redo tax documents or answer tough questions later. Even if you’re confident, a double-check adds peace of mind.

Finish Strong and Stay Organized

Getting a head start on tax prep before the holidays is one of the best ways to protect your construction business’s bottom line. Keeping your books in order, planning for contractor-specific deductions, and double-checking payment schedules sets your business up for smoother project management and stronger profits.

Year-end prep can feel overwhelming, but we can help you focus on what really matters for your business. Staying ahead of deadlines becomes much easier when your paperwork, expenses, and reporting are organized. Our approach to tax planning and preparation is designed to help contractors avoid surprises and stay ready, even during the busiest months. At Builders Tax Group, we keep things practical and personalized, so contact us today to discuss your next steps.