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Feature: The December Checklist for SMB Owners (4 min)
From the Archive:
- Back to $20,000 and 200: The IRS Resets the Rules
- Use Contract Assumptions to Protect Your Deal and Profit
Dear TCoL: Owning Out of State Property in a Florida LLC

-TCoL

Missed our last feature article? The Resolution Every LLC Should Use

An honest December reality is that you are tired, the calendar is crowded, and you will not overhaul your whole business in four weeks. The goal is not perfection. The goal is to finish the year with clean enough numbers, obvious deadlines handled, and a simple plan for the first quarter.

The checklist below is organized by priority. Work from the top down. If you only finish the first two sections, you will still be ahead of most owners.

1. Lock in tax moves before December 31

These items have hard deadlines at year end. Handle them first.

Get a quick tax projection from your CPA
Ask for a year-to-date estimate of your business and personal tax bill. Confirm whether you are on track under the IRS safe harbor rules. In most cases, you avoid underpayment penalties if you paid at least ninety percent of this year's tax or one hundred percent of last year's tax, with a higher threshold for some higher-income taxpayers.

Use this projection to decide whether you should adjust your final estimated payment, accelerate deductible expenses you planned to incur early next year, or delay discretionary income.

Decide on major purchases with your advisor
If you have been considering equipment, vehicles, or major software, confirm how Section 179 expensing and bonus depreciation apply to your situation. Some owners can deduct a large share of the purchase price in the first year, but limits vary and several states do not follow federal rules. Do not buy solely for the write-off. Buy only if the business truly needs it.

Review retirement plan options you can still use
If you already have a solo 401(k), make sure your salary deferral election for this year is documented before December 31, even if the contribution happens later. If you do not have a plan yet, ask whether a SEP IRA makes sense. Many owners can set up and fund a SEP as late as their tax filing deadline, including extensions.

2. Get ahead of W-2s, 1099s, and payroll

This work saves days of stress in January.

Clean and confirm payroll data
Verify each employee's legal name, address, Social Security number, and total compensation for the year. These details feed directly into Form W-2, which must be furnished to employees and filed with the Social Security Administration by January 31.

Collect missing W-9s and prepare your 1099 list
Identify every contractor or unincorporated vendor you paid for services. Make sure you have a completed Form W-9 for each one. For most businesses, Form 1099-NEC is required for service payments of six hundred dollars or more. These forms are due to recipients and the IRS by January 31.

Reconcile payroll and contractor totals to your books
Confirm that totals in your payroll system and accounting software match your bank records. Cleaning this up now prevents costly amendments later.

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3. Clean the books just enough to trust your numbers

You do not need a perfect close. You need numbers you can rely on for taxes and planning.

Reconcile all key accounts
Reconcile bank, credit card, payment processor, and loan accounts to your accounting system. This is the fastest way to catch missing transactions, duplicate entries, or fraud and is a standard year-end control.

Chase receivables and sort payables
Review open invoices and past-due accounts. Send reminders or offer simple payment plans where appropriate. List unpaid bills and upcoming obligations. Pay what is critical and time the rest so you enter January with enough cash for payroll, rent, and taxes.

Review inventory and record write-offs
If you carry products or materials, complete a physical count. Identify obsolete or unsellable items and ask your accountant how to write them off properly. Cleaning up inventory improves both your balance sheet and cost of goods sold.

Back up your accounting data
Confirm that your accounting system and essential business documents are fully backed up in at least one secure cloud or off-site location. Test that the backup can be restored.

If your books are months behind or filled with unreconciled transactions, consider a one-time clean-up engagement so you do not carry the same problems into the new year.

4. Strengthen cash, debt, and basic protection

With cleaner numbers, make one pass through the areas that cause the most trouble during the year.

Review cash flow month by month
Look at your cash flow by month for the current year. Mark the months when cash was tight. Decide how you will handle those same months next year through a small reserve, a committed credit line, or changes in pricing and payment terms.

List every loan and line of credit
Prepare a simple table with each lender, balance, interest rate, and monthly payment. Flag high-rate obligations and explore whether refinancing, consolidation, or a faster payoff makes sense. This work directly affects next year's cash.

Review insurance and basic security
Look over major policies such as property, general liability, workers' compensation, cyber, and key person coverage. Confirm that limits match your current size and risks. Then spend one hour on security. Update passwords, turn on multi-factor authentication for financial and payroll systems, and make sure backups are recent and recoverable.

5. Set a simple 90-day plan for the new year

Avoid the urge to draft a long strategic plan. A focused ninety-day playbook is far more useful.

Review this year's goals and results
Write down the goals you started the year with, even if they were informal. Note what worked, what did not, and why. Use those insights to select a short list of priorities for next year.

Choose two or three priorities and assign clear owners
Examples include increasing recurring revenue, improving customer retention, or launching a new offer. For each priority, set one clear metric and assign a single person responsible for progress.

Build a basic budget and a first-quarter project list
Start with conservative revenue. Add fixed costs such as payroll and rent, then set spending ranges for marketing, hiring, and capital investments. List the projects that must be completed in the first quarter to support your priorities and assign owners and due dates.

Finally, block out several owner days on your calendar for next year. Use these days to review your numbers, adjust your plan, and keep your business moving intentionally rather than reacting to every fire that pops up.

Dear TCoL: Owning Out of State Property in a Florida LLC

Question: I am a Florida resident and own a condo in my Florida LLC. I don't rent it out. The State where it is located has a state income tax. Since I own it in my Florida LLC, when I sell it, will I have to pay state income tax on the gain?

Answer: Likely yes. Most states tax nonresidents on income that comes from property located inside the state. That rule applies even when the owner lives elsewhere and even when the LLC is formed in another state. In your case, the gain from the sale would be considered income earned in the state where the condo sits. The fact that your LLC is a Florida entity does not move the source of that income.

So, how does the state become aware of the sale? At closing, the title company will usually ask for evidence that your Florida LLC exists and has the authority to sell the property. They will also issue an IRS Form 1099 S that reports the gross sales proceeds. Many states receive this information through data sharing or through their own nonresident reporting requirements. Some states require withholding from nonresident sellers. Others require a separate form filed soon after closing. Each system is designed to make sure the state captures tax on real estate gains earned within its borders.

Your use of the condo for personal purposes does not change the sourcing rule. The income is still considered earned inside the state where the property is located. Your LLC's tax classification determines whether the gain is reported by the LLC itself or passed through to you. Either way, the tax filing obligation generally exists at the state level.

A few states treat capital gains differently. Some exempt part of the gain or apply a separate rate. Those details depend entirely on the law of the state where the condo is located. The safe approach is to have a local attorney or CPA review that state's rules and advise you. My expectation is that the state will tax the gain when you sell.

Thank you for reading The Co Letter.

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