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Seven Decisions to Review Before Year-End
When should a business owner begin year-end tax planning?
For many business owners, taxes receive the most attention when a return is being prepared. By that point, however, most of the year’s financial decisions have already been made.
Midyear tax planning offers something different: time.
There are still several months available to adjust estimated payments, evaluate business purchases, increase retirement contributions, review owner compensation and coordinate decisions involving both the company and the owner’s personal financial plan.
The purpose is not simply to search for deductions. It is to understand how today’s decisions may affect your taxes, cash flow, investments and long-term financial goals.
Here are seven areas business owners may want to discuss with their CPA, financial planner and other professional advisors before the end of 2026.
1. Update Your Full-Year Income Projection
Your estimated tax payments may have been based on last year’s income or an early projection for 2026. If revenue, profitability, payroll or expenses have changed, those estimates may no longer reflect where the business is headed.
Start by comparing your year-to-date results with your original forecast. Consider:
- Changes in revenue and profit margins
- New contracts or customers
- Hiring and compensation changes
- Unexpected expenses
- Planned owner distributions
- Capital purchases expected later in the year
The IRS advises taxpayers to calculate estimated taxes using expected income, deductions, credits and other relevant circumstances. Estimates can be recalculated during the year when income or tax laws change.
This review is especially important for owners of pass-through businesses because changes in company profitability can flow directly into the owner’s personal tax situation.
2. Connect Your Tax Projection to Cash-Flow Planning
Knowing your projected tax liability is only part of the planning process. You also need to know where the money will come from.
A business can be profitable on paper while still experiencing cash-flow pressure. Inventory purchases, customer payment delays, debt obligations, payroll, equipment investments and owner distributions can all affect the cash available for tax payments.
Consider creating a cash-flow calendar that includes:
- Quarterly estimated tax payments
- Payroll and employment taxes
- Retirement plan contributions
- Insurance premiums
- Debt payments
- Planned equipment purchases
- Expected owner distributions
The objective is to prevent an upcoming tax payment from competing with payroll, growth investments or other important business obligations.
Tax planning should support the financial health of the business—not create a new cash-flow problem.
3. Evaluate Capital Purchases Before Making Them
Business owners considering equipment, technology, vehicles, office improvements or other significant purchases should begin evaluating those decisions before the final weeks of the year.
Current federal rules generally allow businesses to deduct 100% of the cost of many qualifying business assets purchased and placed into service after January 19, 2025. Section 179 may provide another potential deduction for qualifying property. Eligibility and the most appropriate depreciation method depend on the property and the business’s individual tax circumstances.
Before moving forward, ask:
- Does the business genuinely need this purchase?
- Will it improve productivity, capacity or profitability?
- Must the asset be placed into service before year-end?
- Should the business pay cash or finance the purchase?
- How would the deduction affect this year’s tax projection?
- Would preserving cash be more valuable than accelerating a deduction?
A tax benefit can improve the economics of a necessary purchase, but a deduction alone does not make an unnecessary purchase a good investment.
4. Review Retirement Plan Contributions and Design
Retirement planning can be particularly valuable for business owners because it may accomplish several objectives at once. Contributions may provide tax advantages, help employees prepare for retirement and allow the owner to build wealth outside the business.
For 2026, the employee contribution limit for most 401(k) plans is $24,500. The general catch-up contribution for participants age 50 and older is $8,000. Participants who are ages 60 through 63 may qualify for a higher catch-up contribution of $11,250.
Depending on the type of plan, business owners may also have opportunities involving employer contributions or profit-sharing contributions.
A midyear review provides time to consider:
- Whether contributions are on track
- Employer matching or profit-sharing opportunities
- The company’s ability to fund additional contributions
- Employee participation and eligibility
- Whether the current retirement plan still fits the business
- How retirement savings fit into the owner’s broader wealth strategy
For owners whose net worth is heavily concentrated in their company, retirement contributions may also help gradually move assets into a more diversified personal financial plan.
5. Revisit Owner Compensation and Business Structure
The way a business owner receives income can affect payroll taxes, retirement plan contributions, cash flow and personal income taxes.
Owners of S corporations and other pass-through businesses may need to review the balance between salary, distributions and other compensation. Compensation must also comply with applicable reasonable-compensation requirements.
Qualified business income planning may be part of this conversation. Eligible owners of sole proprietorships, partnerships and S corporations may be able to deduct up to 20% of qualified business income. The actual deduction can be affected by taxable income, business type, wages paid and qualifying business property.
Questions to discuss with your CPA may include:
- Is my current compensation still appropriate?
- Have changes in profitability affected the analysis?
- How does compensation interact with retirement contributions?
- Could upcoming distributions create an unexpected tax obligation?
- Does the current entity structure still support the business’s growth and succession plans?
Changing an entity structure can have tax, legal, administrative and employee-benefit consequences. It should be evaluated as part of a broader strategy rather than as an isolated tax decision.
6. Coordinate the Business Plan With Your Personal Financial Plan
For a business owner, the company and the household are rarely separate financial worlds.
A particularly strong or weak business year may affect decisions involving:
- Personal estimated tax payments
- Retirement contributions
- Investment gains or losses
- Charitable giving
- College funding
- Estate planning
- Insurance and risk management
- The timing of a business or real estate transaction
- Personal liquidity reserves
For example, a higher-income year could influence the timing of charitable gifts or portfolio transactions. A planned business investment could affect the amount of personal liquidity the owner should maintain. A potential sale of the company could require coordinated tax, estate, investment and succession planning well before a buyer appears.
The goal is not simply to minimize one year’s tax bill. The goal is to make informed, after-tax decisions that support the life you are building with the wealth your business creates.
7. Bring Your Professional Advisors Together
Business owners often work with several professionals, including a CPA, financial planner, attorney, insurance professional, bookkeeper or fractional CFO.
Each advisor may have an important piece of the picture, but opportunities can be missed when decisions are considered separately.
Before the fourth quarter, consider scheduling a coordinated planning conversation and gathering:
- Current profit-and-loss statements
- An updated balance sheet
- Payroll and owner-compensation records
- Estimated tax payments made to date
- Retirement contribution records
- Details about planned capital purchases
- Information about charitable gifts
- Investment and capital-gain information
- Updates on a potential sale, acquisition or succession plan
- Significant personal or family changes
The earlier these conversations happen, the more choices you may have available.
Tax Planning Is More Effective Before the Year Is Over
Tax preparation explains what happened. Tax planning considers what can still be changed.
At A&I Wealth Management, we work with business owners to connect business decisions with personal cash flow, investment planning, retirement goals, risk management and long-term wealth strategies. Because A&I does not provide tax or legal services, we coordinate this work with each client’s CPA and other professional advisors.
A midyear review can help everyone work from the same information—and help you enter the final months of 2026 with fewer surprises and a clearer financial plan.
MINI FAQ
Frequently Asked Questions
When should a business owner begin year-end tax planning?
Midyear is an ideal time to begin because the owner still has several months to adjust estimated payments, retirement contributions, business spending and other financial decisions. Waiting until December may limit the strategies available.
Who should participate in a midyear planning meeting?
Depending on the business owner’s needs, the conversation may include the owner, CPA, financial planner, bookkeeper or CFO, attorney and other specialized advisors.
Can a financial planner provide tax advice?
A financial planner can help evaluate how potential tax decisions may interact with cash flow, retirement, investments and long-term financial goals. Specific tax recommendations should come from a qualified tax professional familiar with the owner’s circumstances.
Disclaimer: The information provided in this blog post is for general informational purposes only and should not be construed as financial or legal advice. Please consult with a qualified professional for advice regarding your specific situation.
DISCLOSURE: Client stories included in this blog reflect hypothetical client situations that represent those commonly encountered by AIWM representatives.
