What Can an Agency Owner Still Do in Q4? The Small Dollars Are Real. The Big Dollars Were Decided in June.

By Craig S. Cody, CPA, Certified Tax Coach.

It's October. Your CPA hasn't called.

That's not a scheduling problem. That's the diagnosis.

Fourth-quarter tax planning is real money for a marketing, advertising or PR agency owner, and I'll show you every door that's still open and the date each one closes. But I'll also tell you what most year-end checklists won't: these are the small dollars. The big ones were decided by the choices your agency made, or didn't make, in the first half of the year. The last section of this article is the list of those, and it's the one to take into January.

The Short Answer

Three lists. What's still open before December 31. What already closed. What to fix for January 1.

Still open: retirement plan money, including one route to a new plan after the year ends. The owner's December payroll. Staff bonuses, if you know the 2.5-month rule. Billing and collection timing on the cash method. Equipment and technology placed in service. Giving, under new 2026 rules. The late S election under Rev. Proc. 2013-30. State pass-through entity tax, paid by December 31 so the deduction lands this year. The small strategies that need days on the calendar, like Augusta rule meetings and your kids' payroll. A cost segregation catch-up on a building you already own.

Already closed: a brand-new safe harbor 401(k) with employee deferrals for this year (October 1). The salary structure that sets your QBI, mostly.

Fix for January 1: the entity, the compensation model, the plan design, the accounting method, how media sits on the books, and the contractor file. Those are the big dollars.

Retirement: The Biggest Q4 Dollar Still on the Table

If your agency has a 401(k) that isn't a safe harbor plan, and you're a high earner who keeps getting refunds of your own deferrals because the plan fails testing, there's a fix with a December 1 deadline. Under IRC 401(k)(12)(F), an existing plan can be amended before the 30th day before year end to become a safe harbor nonelective plan for the whole year, with a 3% contribution for every eligible employee. Miss December 1 and the door stays open until the end of next year, but the price rises to 4%.

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If your agency has no plan at all, you can't put employee deferrals in for this year; a new safe harbor plan's first year has to be at least three months long under Regulation 1.401(k)-3(e)(2), which is where the October 1 date comes from. What you can still do is adopt a profit-sharing or cash balance plan after December 31 and fund it for this year. IRC 401(b)(2) lets a plan adopted before the return due date, extensions included, count as adopted on the last day of the year. Employer money only. Your own $24,500 deferral has to come out of a paycheck dated this year.

The 2026 figures, per IRS Notice 2025-67: $24,500 deferral, $8,000 catch-up at 50, $11,250 at ages 60 to 63, $72,000 total per participant. If your payroll already runs at the numbers a cash balance plan needs, that article is the one to read next.

The Owner's December Payroll

An S corporation owner's salary is set by payroll, not by the return. Whatever you want your W-2 to say for this year has to be paid through payroll with a check date in this year.

That matters for three reasons. Your deferral rides on it. Your QBI deduction is limited by W-2 wages once your income is past the threshold. And the reasonable salary number the IRS tests is the one on the W-2, so a December true-up is how a salary that started too low gets fixed without a conversation next April. Run the numbers in November. Don't run them on December 30.

Staff Bonuses and the 2.5-Month Rule

If your agency is on the accrual method, a bonus you commit to this year is deductible this year only if it's paid within two and a half months after year end. Regulation 1.404(b)-1T presumes anything paid after the 15th day of the third month is deferred compensation, deductible when the employee gets it. So a bonus paid March 31 for last year's work belongs to this year's return, not last year's.

One exception hits agency owners directly. Under section 267, an S corporation can't deduct a bonus owed to a shareholder until it's actually paid. If you're paying yourself a bonus, the accrual doesn't count. The check does.

Billing, Collections and the Cash Method

On the cash method, income lands when you receive it, and the year-end move everyone reaches for is to invoice in January instead of December. That's legitimate. What isn't is holding a check that arrived in December until January 2. Regulation 1.451-2 calls that constructive receipt: if the money was available to you, it's income when it was available, not when you deposited it.

The other cash-method move is prepaying. Under the 12-month rule in Regulation 1.263(a)-4(f), a December payment for a benefit that runs no longer than 12 months, and ends by the end of next year, is deductible now. A year of software licenses, insurance, or rent paid in December qualifies. A three-year deal doesn't.

If you're on accrual, the timing lever is different: the code lets you defer an advance payment one year to the extent you haven't earned it. Retainers collected in December for January work are the case. And the question of whether your agency should be on cash or accrual at all is a January 1 item, not a December one; it's a formal method change on Form 3115 and it deserves its own analysis.

The Late S Election and the State Entity Tax

Two doors owners assume are closed.

The late S election. Form 2553 for a calendar year is due March 15, and most owners who missed it assume they're stuck until next January. They aren't. Rev. Proc. 2013-30 lets an eligible entity file a late election up to three years and 75 days after the date it wanted S status to begin, as long as there's reasonable cause for the delay and every shareholder has filed consistently with S status for those years. You file the 2553 marked "FILED PURSUANT TO REV. PROC. 2013-30" with the reasonable cause statement attached. If the four numbers a salary moves are the reason you wanted the S corporation, that's a Q4 conversation, not a January one.

State pass-through entity tax. Most states with an income tax now let a partnership or S corporation elect to pay the state tax at the entity level, and under IRS Notice 2020-75 the entity deducts that payment in the year it's made, outside the individual SALT cap. So the deduction for this year lands only if the entity pays before December 31. Election calendars vary by state, some in the spring and some on the return, so ask now which one your agency is on and what has to be paid before the year closes.

Equipment, Technology and the Building

Anything the agency needs in the next six months and buys before year end can be written off this year. Rev. Proc. 2025-32 puts the 2026 Section 179 limit at $2,560,000, with the phase-out starting at $4,090,000 and a $32,000 cap on heavy SUVs. Beside it, 100% bonus depreciation is permanent for property acquired after January 19, 2025, with no dollar cap and no income limit, which is why bonus can create a loss in a bad year and Section 179 can't.

The test is placed in service, not ordered. A camera on a truck on December 31 doesn't count. A camera in the studio does.

If the agency already owns its building and nobody ever ran a cost segregation study, that's a Q4 conversation with a January payoff: an automatic accounting method change claims every missed year of depreciation in one return. Whether to buy a building is a different question, and the answer starts with four tests that have nothing to do with tax.

Giving Under the 2026 Rules

If charitable giving is already part of your life, the rules changed this year and the timing matters more than it used to. For tax years beginning after December 31, 2025, an itemizer's gifts count only above 0.5% of adjusted gross income, and for humans in the 37% bracket every itemized dollar is worth 35 cents instead of 37. Non-itemizers get a $1,000 deduction, $2,000 on a joint return.

The practical response is bunching: two or three years of giving in one December, often through a donor-advised fund, so the floor is cleared once instead of every year. If giving isn't already part of your plan, don't start one for a deduction. The math never works.

The Small Strategies That Need Days on the Calendar

Some of the most-sold year-end strategies can't be done in December because they require things to have happened.

• The Augusta rule. Up to 14 days of renting your home to the agency, tax-free to you and deductible to the business, under IRC 280A(g). The meetings have to happen this year, with minutes and a market-rate comparable. Fourteen days you invent on December 28 aren't fourteen days.
• Your kids on payroll. Real work, real payroll, dated this year. The 2026 standard deduction is $16,100, so wages up to that carry no federal income tax. A lump sum on December 31 for a year of "work" is the version that fails.
• Accountable plan reimbursements. If you've been paying home office, mileage and phone out of pocket, the accountable plan has to be adopted and the expenses submitted and reimbursed before the year closes.

What Already Closed, and What to Do About It

A new safe harbor 401(k) with deferrals. October 1. If you missed it, the after-year-end profit-sharing route above still exists, and a January 1 plan gets you the full year next year.

The salary and QBI structure. You can true up December payroll, but the year's wage base and the entity that produced it were decided months ago.

What to Fix for January 1: The Big Dollars

Here's the honest version. Fourth-quarter moves can turn into real money. But the entity structure, the compensation model, the plan design, the accounting method, how client media sits on the books, and whether your contractors are documented as contractors: those are the decisions that set an agency's tax bill, and every one of them belongs in the first half of the year. The fourth quarter can correct them for next year. It can't recover this one. If the first time you hear from your CPA is November, you're not getting the big dollars, you're getting the small dollars.

The tax planning guide for agency owners walks each of those decisions. The January conversation is the one that decides next December.

Who This Is For, and Who It Isn't

This is for an agency owner with a profitable year behind them and a CPA who files but doesn't plan. Every item above is a question you can ask that CPA this month, with a date attached, and the humans who ask in October get better answers than the ones who ask in December.

This isn't for an agency that lost money this year; the moves above accelerate deductions, and a loss year usually wants the opposite. And it isn't for anyone hoping a December purchase they don't need will fix a structure they never built. A deduction that costs a dollar to save 37 cents is a purchase, not a strategy.

Filing a return isn't a tax strategy. Neither is a checklist in December.

Frequently Asked Questions

Can I still set up a 401(k) for this year in the fourth quarter?

Not a new safe harbor plan with employee deferrals; the first plan year has to be at least three months long, so October 1 was the deadline. An existing non-safe-harbor plan can be amended into a safe harbor nonelective plan by December 1 with a 3% contribution, and a profit-sharing or cash balance plan can be adopted after year end and funded for this year with employer money only.

Can I make a retirement contribution for this year after December 31?

Employer contributions, yes, up to the return due date including extensions, and a plan adopted by then can count as adopted on December 31. Your own elective deferral can't be made retroactively; it has to come out of payroll dated this year.

Should my agency prepay expenses in December?

On the cash method, a December payment for a benefit lasting 12 months or less, ending by the end of next year, is deductible this year under the 12-month rule. Prepay things you'd buy anyway. Don't prepay three years of anything; that has to be capitalized.

Can I buy equipment in December and deduct all of it?

Yes, if it's placed in service by December 31. The 2026 Section 179 limit is $2,560,000 and 100% bonus depreciation is permanent for property acquired after January 19, 2025. Ordered and in transit doesn't count; installed and available for use does.

How do the 2026 charitable rules change year-end giving?

Itemizers now deduct only gifts above 0.5% of adjusted gross income, and taxpayers in the 37% bracket get 35 cents of value per itemized dollar. Non-itemizers can deduct $1,000, or $2,000 on a joint return. Bunching several years of giving into one year, often through a donor-advised fund, clears the floor once.

What's the difference between big-dollar and small-dollar tax planning?

Small-dollar planning is timing: what you buy, pay, bill and contribute before December 31. Big-dollar planning is structure: the entity, the owner's compensation, the retirement plan design, the accounting method, how media and contractors sit on the books. Structure is set in the first half of the year and shows up on every return after it.

Let's Talk

If this list is the first time you've seen these dates, the problem isn't the fourth quarter. It's that nobody is running the first half. Bring your last two filed returns and we'll show you what the January list is worth for your agency, in dollars.

Book a Free Tax Analysis

Nobody's looking out for your money but you. Let's go look together.

Craig S. Cody is a CPA, Certified Tax Coach, and retired NYPD Lieutenant. His firm works with more than 70 marketing and advertising agency owners every month, helping them keep more of what they make through proactive tax planning.

This article is general education, not advice for your specific situation. Confirm your own facts with your advisor before acting.