Small businesses adopt year-end tax strategies to avoid IRS penalties

Small business owners are increasingly utilizing year-end tax strategies before the December 31 deadline to prepare for upcoming filing seasons. According to the 2026 Small Business Tax Confidence Report from 1-800Accountant, nearly 60% of surveyed business owners have received an IRS notice or penalty, and 37.7% have received more than one.

Key strategies include reconciling business bank and credit card accounts to separate personal and business expenses. The report notes that 14% of owners regularly mix personal and business funds, while 10% use informal methods to track expenses. Additionally, maintaining accurate mileage logs is critical, as vehicle expenses represent the most common deduction for 72% of the firm’s clients.