Most small business owners I know treat year-end tax planning the same way: they don't. They run hard all year, the accountant calls in March, and they write whatever check shows up. It's not that they don't care about taxes—it's that proper tax planning has always required either expensive advisors or skills most of us don't have time to develop.

In the startup world where I operate most of the time, no year is like the previous one. That's why founders and CEOs often come unprepared for tax season—but in 2025, they don't have to.

I ran AI-driven tax planning for myself and my clients this December, and it's definitely a game-changer.

A correct AI-based workflow makes tax planning clear and fast. Not easy, not automatic, but manageable.

And there are still three weeks left in December to implement tax optimization strategies—so let's do it.

December Fractional CFO Corner – AI Finance Club. This month’s session dives into Google Gemini and Google AI ecosystem for the office of a CFO.

If you’re already a member, join us on Thursday, Dec 18th, for the live discussion.

Not a member yet? Now’s a great time to join the club and see how other CFOs are applying AI to real workflows.

I spent the first week of December running this process with two clients and also for my own business. What struck me wasn't just the tax savings we identified—though that was significant—it was how the process clarified the entire financial picture. One client discovered they were sitting on a $52K tax shortfall they didn't know existed. Another found out they'd been operating with a compliance risk that could have cost them $75K-100K in an audit. In both cases, we had enough time to act because we ran the analysis in early December. If you do it now, you still have time to act.

Year-end tax planning has always been the domain of CPAs and tax advisors. For small businesses and fractional CFOs, it's either expensive or reactive. The planning window is tight. You need projections by mid-November to make decisions and act by December 31. Most small businesses skip strategic planning entirely and just write the check when taxes are due.

What changes with AI? AI can now run the entire analytical workflow: project full-year results, calculate taxable income, research optimization strategies, model scenarios. This doesn't replace your CPA's judgment or compliance work—you still need professional validation before implementing anything. But it gives you the analytical foundation to have smarter conversations earlier. The shift is from "what do I owe?" to "what are my options, and what's each one worth?"

For fractional CFOs, this is transformational. You can now deliver strategic tax planning to clients without needing a tax background.

For internal CFOs, you can run scenarios before engaging external advisors, making those conversations more productive and focused.

For business owners, you can finally answer the question: "If I do X, what happens to my tax bill?"

The real value isn't just tax savings. It's bringing tax planning into the same iterative, scenario-based approach you already use for budgeting and forecasting. "What if we accelerate this expense?" or "How does a retirement contribution change the picture?" can now be answered in minutes.

Let me share two quick examples.

In both cases, the exercise took several hours, including gathering information, researching optimization options, and comparing scenarios. We ran the final scenario through CPAs to make sure we didn’t miss anything.

Here's how the process works:

Before uploading any financials, profile the business: industry, entity type, location, headcount, owner compensation, expected one-off items. This gives AI the parameters it needs for accurate tax calculations. Entity type matters—an LLC, S-Corp, and C-Corp have completely different tax treatments.

Upload your YTD P&L and have AI extrapolate to full year, then calculate estimated taxable income based on entity type. This establishes your baseline. You're answering: "If we do nothing between now and year-end, what do we owe?"

AI calculates expected tax liability using entity-specific rules, pass-through treatment if applicable, self-employment tax, and payroll tax impacts. Now you know what you're working with—the actual dollar amount, not a guess.

AI researches year-end strategies relevant to your profile, clustering them by impact and feasibility. This is where you discover options you might not have known existed. Equipment purchases, retirement contributions, prepaid expenses, bonus timing, invoice timing—all tailored to your specific situation.

Take the five most promising strategies and model the dollar impact on taxable income, federal taxes, state taxes, and total cash savings. See each strategy individually and combined. This is where strategy becomes concrete: "If we do A, we save $12K. If we do B, we save $8K. If we do both, we save $18K."

Model specific scenarios you're considering: retirement contributions, prepaid expenses, year-end bonuses, invoice timing. Each scenario shows individual and combined impacts. This is the iteration layer—you're testing different combinations to find the right balance between tax savings, cash flow, and business objectives.

AI synthesizes everything into a CFO-ready memo with recommended actions, estimated savings, timing considerations, compliance notes, and what to do before December 31.

Optional Step: Ask AI to identify risks, red flags, or missing information that could affect accuracy or compliance.

The key to making this work is breaking it into steps with checkpoints. You're not asking AI for "a tax plan"—you're building it incrementally. Each step validates the previous one before moving forward. This is the same principle we've talked about before: manage AI like an analyst, not a magic box.

That's the framework and what it looks like when applied to real businesses.

In the paid section, you're getting:

If you're working on year-end planning—or running your own business—you still have time to execute this before December 31. But you need to start this week.

It’s December 9th, and you still have time—but not much. The examples I shared ran their analyses in the first week of December and are executing now. If you wait until Christmas, many of these strategies become impossible.

The goal isn't just to save money on taxes. The goal is to stop treating tax planning as something that happens to you in March and start treating it as part of your regular financial strategy—something you can model, test, and optimize.

I spent about eight hours total running this for three businesses (two clients plus my own). The tax savings identified ranged from $23K to $47K. The compliance risks caught ranged from "minor documentation issue" to "potential $100K audit exposure." The peace of mind from knowing exactly what we owe and having a plan to optimize it? Priceless!

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Until next Tuesday, keep balancing!

Anna Tiomina
AI-Powered CFO