Tax Planning for Small Business Owners Tax planning questions owners ask

When should I start tax planning?

As early in the year as you can. Some moves, like your S corp salary and your 401(k) deferrals, work best spread across the whole year. October is still a good time to plan the year-end moves. See the October checklist.

Should my LLC be an S corp?

Often yes, once profit is steady and well above a fair salary for your work. The savings are in Social Security and Medicare tax on the profit above the salary, minus the cost of payroll and a separate return. Our page on choosing how your business is taxed shows the math.

How much should I pay myself?

Enough to fit the work you do, based on what similar work pays. We help you pick that number from pay data for your kind of work, and we keep a short note showing where it came from. See setting your owner salary.

Which retirement plan is best for a small business?

For an owner with no employees, a Solo 401(k) usually allows the most. A SEP IRA is simpler and can be opened after the year ends. A SIMPLE IRA fits a small team. See retirement plans that lower your tax.

What is the QBI deduction?

A deduction of up to 20 percent of qualified business income for many owners of sole proprietorships, partnerships and S corps. Your salary and your income level change how much you get. See the QBI deduction.

How do I avoid the estimated tax penalty?

Spread at least last year's full tax over your four payments. Make it 110 percent when last year's adjusted gross income topped $150,000. Paying 90 percent of this year's tax also works. See quarterly estimated taxes.

Can my company pay me back for my home office?

Yes, if your company is an S corp or a C corp and it has an accountable plan. The repayment isn't wages, and the company deducts it. See accountable plans.

What does tax planning cost?

The first 30-minute call is free. After that, most owners choose a monthly retainer that covers the books and the plan, or a fixed-fee project for a one-time plan. The price is in writing before we begin.

Do you run payroll or sign audits?

Payroll help is setup: we get your chosen provider ready, and you run payday through it. When a lender asks for an audit or a review of your financial statements, we point you to an audit firm and keep your books ready for them. Details are on how we work.