Solopreneurs Should Do These 5 Things Before December 31st

This article was originally published in Accounting Today and written by Ran Harpaz, CEO of Lettuce, and Diane Kennedy, Head of Tax Education at Lettuce.

High-earning solopreneurs often operate without a deliberate business structure in place. They file as sole proprietors by default, sometimes because it's the path of least resistance, sometimes because an accountant told them it was fine for now, and sometimes because they're unsure how long they'll stay fractional. Others assume the paperwork is too much of a hassle or the cost of incorporation just isn't worth it.

For solopreneurs earning under $70,000 annually, this logic often holds. The cost and complexity of incorporation may not justify the savings. 

But for those earning $100,000 or more, such as marketers, therapists, consultants and creators, those who are polyworking, and other high-earning solopreneurs, the math shifts dramatically. At that income level, the tax advantages of proper structuring create material financial differences. Missing the window to make these decisions before year's end means losing a full year of potential savings.

The result for higher earners is consistent: thousands of dollars in unclaimed savings, missed tax strategies and benefits access tied to decisions they never actively made.

Some of these issues can be addressed at any time, but others have hard deadlines. Here are five moves that matter before December 31, 2025.

1. Set Up Your LLC Before Year-End

The reason this comes first is because it has the most restrictive deadline.

An LLC filed before the end of the year opens the door to an S Corporation election that takes effect Jan. 1. That timing matters because S Corp status can reduce your self-employment tax burden significantly. For those who elect S Corp status, this means saving thousands annually, depending on your income level and business structure. The election itself takes effect on the first day of the tax year you select. 

Beyond the tax mechanics, there's a credibility component. Banks, lenders and institutional partners treat an LLC differently from a sole proprietorship. The distinction signals that you're operating a business, not a side venture. This matters for business credit, vendor relationships and client perception.

The operational lift is minimal. Most states process LLC filings within weeks, and costs typically run under $300. If you're considering S Corp status, get this done now.

2. Document Your Startup Contributions

This is the deduction most solopreneurs leave on the table. Think about what you brought to your business when you started. A laptop? A cell phone? A desk? Industry-specific tools? All of it has real value, and all of it can be legitimately deducted.

Here's what we see happening: Solopreneurs buy these items out of pocket, use them for their business, and never claim them as deductions. It's not intentional avoidance; it's usually just oversight. They don't realize they can document these contributions, find their fair market value (online marketplaces make this easy), and record them as business assets. Your business can then reimburse you, creating a legitimate tax deduction for your company and tax-free cash in your pocket.

It's a win on both sides of your personal and business finances. And it's one of the easiest deductions available — for money already spent!

3. Review Your Last Month's Spending

Pull up every transaction you had in November. Go through them methodically and ask one question about each one: "Was this ordinary and necessary for what my business does?"

For a content creator, the answer to camera gear or editing apps is obvious. For a consultant, industry research subscriptions and professional development clearly qualify. But the deductions hiding in your spending often aren't obvious until you look carefully.

We consistently see solopreneurs discovering hundreds or thousands in missed deductions in a single month's analysis. They've been paying for deductible expenses out of pocket without claiming them. A detailed review takes an hour or two, and the refund can be substantial.

Do this before year-end. The tax advantage depends on it.

4. Prepare for Payroll if You're Electing S Corp Status

If you're going the S Corp route — and for many solopreneurs with high income, it makes sense — you need to understand what comes next. Once your S Corp election takes effect, you're required to pay yourself a reasonable salary. This requirement comes with important tax benefits, but it also demands preparation.

Before January, research what constitutes reasonable compensation in your industry and line up a payroll provider. The goal is to start clean on Jan. 1, not scramble mid-year trying to implement payroll retroactively.

If your business is newly launched without a steady income yet, you have flexibility. You can delay or reduce salary until revenue supports it. But having the infrastructure ready, the research done, and the payroll provider selected prevents the scrambling that often leads to mistakes.

5. Schedule Your Annual Meeting

While corporations are legally required to hold annual meetings, even LLCs benefit from this practice. When it's properly documented, your annual meeting is deductible. More importantly, it serves as a strategic checkpoint: Review the year behind you, assess what worked and what didn't, and plan your next chapter.

Here's the bonus: It can double as a strategic business retreat. Combine planning with a break from daily operations. You get the tax deduction and the mental reset.

The Bigger Picture

These five moves address something we see consistently with high-earning solopreneurs: They're too often optimizing around individual problems without stepping back to look at their overall financial structure.

Getting the structure, deductions and financial strategy right isn't complicated or expensive. Taken together, these moves represent a shift from reactive financial management to intentional structure. Getting it done before year-end enables solopreneurs to enter 2026 from a position of strength, clarity and confidence that they are maximizing revenue instead of playing catch-up from behind.