Tax planning
Your tax becomes a number you set, not a number you are told.
Entity choice · salary and distribution balance · timing · SEP-IRA and solo 401(k)
Your tax becomes a number you set, not a number you are told.
Entity choice · salary and distribution balance · timing · SEP-IRA and solo 401(k)
By the time the return is being prepared, almost every variable has been fixed. The entity has been chosen, the salary has been paid, the equipment has been bought or not bought, the retirement contribution has been made or missed. A preparer can only report what happened.
Planning moves the conversation back to the point where the decisions are still open. That is the difference between the firm that files your return and the firm that lowers your tax.
Once profit reaches a certain level, an S-Corp election can reduce self-employment tax considerably; but it brings a payroll obligation with it, and it only works when the owner's salary is defensible. Rather than apply a rule of thumb, we calculate both scenarios.
For S-Corp owners the split between salary and distributions is the biggest lever — and the item set most carelessly.
Pulling income and expenses forward or pushing them back across the year boundary, depreciation choices on equipment purchases, which year a gain is recorded in. Small shifts made deliberately add up.
A SEP-IRA or a solo 401(k) can shelter a meaningful share of self-employment income from tax. For many business owners it is the single largest deduction available, and it is regularly left unused.
Most of the planning work is done between September and November, while the year can still be shaped. By January the options have narrowed noticeably.
It depends entirely on the level of income and on the structure. For some business owners the S-Corp election alone changes the figure considerably; for others the right answer is to change nothing. We would rather tell you the second than sell you a structure you do not need.
Retirement contributions and a few timing items stay open. The window in which the real decisions get made is September to November.
Someone else may be preparing your return. Planning is carried out as separate work; we give you the results in writing so that you can share them with your current preparer.
A conversation before the year closes can change what you pay in April. Held in January, the same conversation is only a diagnosis.
If a report was missed the position is clearer still: the voluntary disclosure programs can reduce penalties substantially and sometimes remove them altogether. The single condition is coming forward before the IRS contacts you. The moment an examination opens, that door closes.
In both cases the deciding factor is the same one: timing.
Free, about half an hour, and nothing follows from it — if your situation is not a fit for us, we will say that plainly too.