Here are the most important tax-planning steps business owners and freelancers can take to make smart deductions and prepare for tax season

• Tax Day 2020 is April 15, but time is running out for business owners to make year-end investments to maximize their deductions on tax bills.
• Business owners and freelancers should only purchase items that fit their businesses' needs and complete equipment purchases and estimated tax prepayments before December 31 to reduce tax liability.
• Other expenses may not qualify if they aren't used this year, and some retirement accounts can be funded in 2020 and still credited on the 2019 return.
• Before making any major year-end financial commitments, business owners should consult a certified public accountant who can help navigate the rules in the 2017 tax law.
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If 2019 was a profitable year for your business, that can mean a larger tax liability in April.

As the year comes to a close, time is running out for business owners to make purchases and other investments to maximize the deductions on their 2019 tax bill.

But not all December spending is equal. Being smart about when you spend is nearly as important as what you spend in the weeks before Tax Day 2020.

"The number one thing business owners need to have is a good set of books and an estimate of taxes owed before year-end," said CPA financial planner Mackey McNeill in an interview with Business Insider.

McNeill discussed some of the financial decisions freelancers and business owners should make - and which pitfalls they should avoid - to prepare for tax season.

Buy it now only if you'll use it now

Big-ticket equipment purchases like vehicles or computers are a quick way to spend money, but McNeill said any new investment needs to help with the bottom line.

"It needs to be a good business decision first, then it can be a good tax decision," she said. "If you set things up that way, you will win. If you do the opposite, you will lose."

It also matters when you pay for these things. The IRS cares a lot about the timing of transactions, so some "buy now pay later" arrangements may not hold up if they aren't a legally binding form of debt, such as a credit card or installment contract.

McNeill also cautions that financing a piece of equipment that you've fully deducted for your taxes can lead to a mismatch of cash flows. Because of pitfalls like those, she considers year-end spending sprees to be "a disaster in the waiting."

Other equipment and property investments are subject to the 2017 tax law's new rules about depreciation and amortization, and the IRS has a collection of resources for small businesses and self-employed taxpayers that goes into more detail.

The tax law's new income brackets are another thing to watch out for, McNeill said. End-of-year spending could put some taxpayers who are near a threshold into a different bracket.

Finalize your estimated taxes and catch up on charitable giving

The IRS requires businesses and freelancers to pay estimated taxes each quarter, and depending on your cash flow situation, your business may be ahead or behind schedule.

While there are penalties for underpayment, overpaying your quarterly obligation doesn't earn you any meaningful advantage. Also, prepaying certain non-federal taxes could also help reduce your liability in April.

The increase in the standard deduction from the 2017 tax law is now fully in effect, which means the benefits of itemized charitable giving are largely wiped out this year.

McNeill advises her clients to "bunch" several years-worth of giving into one year in order to get it to exceed the standard deduction. Large gifts can be given to a foundation that can disburse the funds in smaller amounts on the donor's behalf.

There are important regulations and procedures to consider, depending on the business' structure and type of gifts, and donations must be made during the calendar year to count.

December is a good time to review the past year's charitable activities and see if any late gifts would make tax sense. If your business has maxed out its allowable giving for the year, you may need to wait until January to resume your tax-advantaged donations.

Set up a retirement account today and fund it later

Most small business owners and freelancers can wait until 2020 to fund their retirement accounts and still get credit for 2019, though some accounts must be opened by December 31.

While there is no tax advantage to tying up cash in an IRA now if that money could be used for necessary purchase, excessive spending just to lower your tax bill won't help your business grow. For example, if your tax rate is 33%, that means you have to spend $3 just to get a $1 deduction.

Tax-advantaged retirement savings can lower your April bill, and let you and your team keep the money. For 2019, small employers can contribute $13,500 per employee in a SIMPLE IRA, and self-employed individuals to contribute 25% of their earnings to a SEP plan, according to the IRS.

Another option is doing a Roth conversion of an existing IRA, which must be executed before December 31, McNeill said. There is a tax expense to consider, but she said, "it may be worth paying some tax now to get the money tax-free later."

Whatever tax-motivated investments you make this month, you may want to make sure you'll be able to maximize your retirement contributions by April, even if that means spending less in December.

Decide if you need a professional to help

Before making any major year-end financial commitments, business owners should consult with a professional to avoid spending money in ways that don't help your business or your tax situation.

Not only can a tax pro help you understand what investments would be best for your business, they can save you money by spotting costly mistakes in your filings.

"The little bit of money you spend to be proactive will save you in the long run," McNeill said.

According to Business Insider's tax-prep flowchart, odds are you'll need to hire a CPA to help you in April, so now is a good time to start making calls.

As tempting as it may be to try to get your tax bill down to zero, McNeill says businesses should have the long game in mind. What may seem like a major benefit now could have expensive consequences for future years' filings.

She has seen some clients who were so focused on zeroing out their tax bill that they dropped out of eligibility for typical deductions that would have actually saved them money.

It's also important to remember that the IRS is not the only entity interested in your returns. Financial institutions and other parties may require you to share past returns to secure funding or substantiate your claims about your financial health. After all, paying taxes is one way of showing that a business is profitable.

In the final days of 2019, McNeill advises doing a bit more tax planning - not just tax preparation.

Read more of Business Insider's Tax Day 2020 coverage here