Introduction

Every December, I start getting the same call from contractors: “Hey Joe, can we squeeze in one more write-off before the year ends?” It’s the accountant’s version of Christmas carol season. And truthfully, it’s the best time to get serious about your numbers — because what you do before December 31st often determines whether you owe the IRS or get money back.

Most electricians I work with wait too long. They assume tax planning means their accountant runs the return in March and “finds savings.” That’s too late! Real tax planning happens now — before the clock runs out. If you’ve had a busy year wiring up new builds, replacing panels, or scaling your crew, now’s when you can legally keep a chunk of those hard-earned profits.

So grab a coffee (or a Monster, I get it), and let’s break down what smart end-of-year planning looks like for electrical contractors.

Review Your Income and Expenses Before the Year Ends

Before you start buying tools just to get a deduction, let’s look at where you actually stand. Pull your Profit & Loss statement from QuickBooks or Xero. I like to filter it through October or November to see the trend.

Ask yourself:

• How much profit have I earned so far?

• Are there unpaid invoices I can push to January?

• Any large expenses I can prepay before year-end?

For many of my clients, we use a simple tactic: delay income and accelerate deductions. If you’re on cash-basis accounting, delaying a big December payment until January can shift taxable income by thousands. Likewise, stocking up on materials or paying insurance early can move deductions into this year.

But here’s the catch — don’t blow cash on stuff you don’t need. Buying a truck you can’t afford just for the “write-off” isn’t smart. A good rule of thumb: only spend money you’d already spend in the next 3 months anyway. You’re not outsmarting the IRS if you drain your bank account doing it.

Use Section 179 and Bonus Depreciation to Your Advantage

This is the fun part — write-offs for gear! Section 179 lets you expense equipment like trucks, lifts, laptops, and testing tools right away, instead of depreciating them over years. For 2025, you can write off up to $1,220,000 in qualifying purchases (subject to phaseouts). Bonus depreciation is phasing down, but it’s still available for most new and used assets.

Here’s a common scenario:
You buy a $65,000 work van in December. You put it in service before year-end — that means you actually start using it for business — and boom, you can deduct the full cost. Same with new testers, ladders, or laptops for your team.

Pro tip: if you’re planning to buy in January anyway, do it before December 31st. Just make sure it’s actually in service this year. The IRS won’t let you write off something that’s still sitting at the dealership.

Pay Your Team (and Yourself) Strategically

Labor is your biggest cost, and how you handle it before year-end can change your tax bill. If you run payroll, you might consider bonuses in December to reduce taxable profit. Not just for your crew — also for yourself as the business owner.

If you’re taxed as an S corp, your salary and distribution mix matters. Pay yourself a “reasonable salary,” then take the rest as distributions to minimize self-employment tax. This is where a CPA who knows contractor work really earns their fee — we can model different combos and see what saves the most tax legally.

And don’t forget retirement contributions. Even a simple SEP IRA or Solo 401(k) can offset a huge chunk of income. Example: a $20K contribution could save roughly $4K–$6K in federal tax, depending on your bracket. You can even make contributions up until the filing deadline, but the sooner you plan, the more you can fund.

Clean Up Your Books and Reconcile Everything

I can’t tell you how many electricians I’ve seen throw receipts in a shoebox. No shame — you’re busy building stuff, not sorting paperwork. But before December ends, spend a few hours cleaning things up.

Here’s a quick checklist:

• Reconcile bank and credit card accounts.

• Categorize transactions properly (no more “Ask My Accountant”).

• Separate personal and business expenses.

• Track outstanding invoices and unpaid bills.

• Make sure all W-9s are collected for subcontractors.

When your books are clean, year-end planning becomes way easier. You’ll actually know your real profit. That’s when we can decide whether to buy gear, prepay expenses, or shift income. Messy books = bad decisions.

And honestly? Clean books make your life 100x easier come tax season. You’ll thank yourself in March.

Plan for Estimated Taxes and Avoid Penalties

If you’ve had a strong year — say, $800K in revenue or more — you might owe estimated taxes. Most contractors get burned here. They don’t realize the IRS expects payments quarterly, not just at year-end.

The trick is to make a final estimated payment by January 15th to stay penalty-free. Even if your CPA projects you’ll owe a bit, paying in early can save interest and stress. I always tell my clients: don’t give the IRS an interest-free loan, but don’t ignore them either.

A good CPA will estimate your final tax bill and guide whether to send one last payment or wait until filing. Either way, know your number before year-end so you’re not blindsided in April.

Don’t Forget the Big Picture — Tax Planning Isn’t Just for December

Real talk: if you only think about taxes once a year, you’re leaving money on the table. True tax planning happens all year long. The best contractors I work with meet quarterly — we track revenue, run forecasts, and shift strategy before it’s too late.

But December’s the safety net. It’s your chance to make moves that count. Whether it’s buying equipment, maxing out your 401(k), or cleaning up your books, every hour you spend now can pay off big later.

So pour another cup of coffee, grab your P&L, and let’s get this done before the ball drops. Because nothing feels better than starting a new year knowing Uncle Sam isn’t getting more than he deserves.

Conclusion

Year-end tax planning isn’t just paperwork — it’s about protecting your profit. When you’re out there climbing ladders and managing crews, taxes are the last thing you want to think about. But these few steps can mean the difference between owing $20K and getting a refund.

My advice? Don’t wing it. Partner with a CPA who understands electrical contractors, knows your industry write-offs, and actually helps you plan ahead. Whether you’ve had your best year yet or you’re just trying to catch up, there’s still time to make smart moves before the year ends.

Now go on — finish strong, stay safe on the job, and let’s make sure 2025 starts with more cash in your pocket and less stress on your mind.

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