The EP Wealth Advisors year-end financial checklist gives business owners clear deadlines to balance company distributions, corporate retirement contributions, and family wealth transfers before December 31.
When most of your balance sheet is tied up in an operating company, year-end decisions require looking at business cash flow and household estate priorities together.
How should business owners handle compensation and retirement plans?
Business owners should review corporate profit levels by early November to set final W-2 wages and fund tax-deferred accounts. EP Wealth Advisors reviews payroll runs with CPAs to verify that total defined contribution additions fit within the 2026 limit of $72,000 per participant.
The table below shows annual limits and action cutoffs for common small-business retirement vehicles.
| Plan type | 2026 Basic limit | Catch-up (age 50+) | Funding deadline |
|---|---|---|---|
| Solo 401(k) deferral | $24,500 | $8,000 | Dec 31 (payroll) |
| Total 401(k) addition | $72,000 | $8,000 | Tax filing deadline |
| Cash balance plan | Actuarial limit | Varies by age | Plan year deadline |
| Traditional IRA | $7,500 | $1,100 | Tax filing deadline |
- Top off employee 401(k) salary deferrals up to the 2026 limit of $24,500, plus the $8,000 catch-up if you are age 50 or older.
- Calculate company profit-sharing contributions before closing the corporate books for the calendar year.
- Fund cash balance pension plans by your plan agreement deadline to shelter substantial income above standard 401(k) limits.
- Review owner W-2 compensation against company pass-through net income to verify reasonable salary benchmarks.
Family gifting and estate planning for business owners
Year-end is the final chance to use annual gift tax exclusions before they reset on January 1. For 2026, you can give up to $19,000 per recipient without filing a gift tax return or tapping your lifetime exemption.
EP Wealth Advisors helps business founders use these exclusions to transfer liquid assets or non-voting shares to children, grandchildren, and trusts.
- Deliver checks or initiate share transfers for the $19,000 annual exclusion per recipient so funds settle before December 31.
- Pay family medical bills or educational tuition directly to institutions, which bypasses the annual gift cap entirely.
- Review ownership arrangements and beneficiary designations on corporate buy-sell agreements and family life insurance trusts.
- Set aside private family funds to support care needs for aging parents before the tax year closes.
Pre-sale preparation and business succession planning
If you are considering an exit within the next three to five years, your fourth-quarter books establish the trail prospective buyers will audit. Business succession planning requires separating discretionary owner perks from genuine operating expenses so earnings before interest and taxes reflect true performance.
EP Wealth Advisors advisors review company cash balances against working capital requirements to prevent leaving trapped equity on the corporate ledger.
- Isolate personal expenses paid through business accounts to clean up company financial statements for future valuation.
- Review key employee retention agreements and performance bonuses tied to corporate succession milestones.
- Evaluate equipment purchases and depreciation schedules with your CPA to assess whether accelerated deductions fit your current tax bracket.
- Update your business valuation benchmark to compare company equity against your ultimate target for retirement income.
EP Wealth Advisors: common questions
When should business owners start year-end financial planning?
Business owners should start year-end planning in October or early November. Starting in the fall allows adequate time to run income projections with your CPA, adjust payroll withholdings, execute retirement plan documents, and complete family gifts before banks close transactions in late December.
What is the deadline for 2026 annual family gift tax exclusions?
Gifts using the $19,000 annual exclusion for 2026 must clear the recipient's bank or brokerage account by December 31. The IRS does not grant grace periods for postmarked checks that clear in January, which would count against the following year's limit instead.
Can business owners set up a new retirement plan in December?
Yes, owners can adopt qualified retirement plans like a Solo 401(k) up to their business tax filing deadline, including extensions, for employer profit-sharing contributions. However, employee salary deferrals must be elected before December 31 through formal payroll records.
Portfolio rebalancing and charitable giving strategies
Building wealth outside your primary business insulates household stability from commercial risks. Investing sale proceeds and personal savings involves risk, including loss of principal, so rebalancing at year-end keeps your asset allocation disciplined.
For business owners with high income spikes, pairing philanthropic donations with tax-loss sales reduces federal exposure before December 31.
- Harvest taxable capital losses in non-retirement accounts to offset realized capital gains from investment or asset sales.
- Donate appreciated mutual funds or private shares into a donor-advised fund to claim an immediate itemized deduction without triggering capital gains taxes.
- Confirm that emergency liquid reserves cover six to twelve months of personal living costs outside company accounts.
- Distribute required minimum distributions from inherited IRAs or qualified plans before the final banking day of the year.
This material is general information only, not individualized investment, tax or legal advice for your circumstances. Investing involves risk, including the possible loss of principal. Before making financial decisions, consult a qualified professional about your own situation.