How Our Client Saved Nearly $30k In Just The First Year of Tax Strategy

Self-Employment Taxes Had Become a Significant Burden 

As a tax advisory & accounting firm, we frequently see highly skilled business owners who are experts in their field paying more than they should be in state & federal income taxes.    

Our client is a talented furniture restoration expert who had a common tax problem. While he was working hard on operating his business successfully year after year, taxes were cutting away at his hard earned income.  

When we began our review of the business financial statements and tax documents, we quickly determined that our client could benefit from a well implemented tax plan. 

We Began With a Comprehensive Review 

When we first started working together, our client’s business was operating as a Sole Proprietorship, leaving money on the table for the IRS & FTB.  Making the switch to the S-Corporation was a tax advantaged solution that unlocked further tax strategies. 

Our Client’s Tax Advisory Game Plan

After a diligent review of the opportunities available for this client, we spotted several ways to help keep more hard-earned cash – using methods that already exist within the United States tax code.  Here’s a breakdown of the steps we took:

1. Filing an S-Corp Election

The first course of action – we set up the business as an S-Corporation. This change in tax election with the IRS is well worth the unlock of future tax savings for many successful small businesses. 

2. Utilizing Property for Business Use 

By implementing the Augusta Rule, we helped our client take advantage of this underappreciated tax strategy, allocating funds back to the business that would otherwise have been spent on taxes.  

3. California SALT Deduction Workaround

After the S-Corp election, our client was able to utilize the Pass-Through Entity Tax election. This relatively complicated aspect of the tax code is commonly overlooked by less technical accounting professionals.  

4. Increased Retirement and Healthcare Savings

Without using very complicated investing vehicles, we set up a triple threat of tax-saving accounts.  By allocating income towards retirement & health savings accounts, we were able to save dollars that would otherwise have been taxed.  

The Results? Setting Up a Business Owner for Maximized Tax Savings

After tax advisory, we were able to reduce our clients tax burden from $77,675 to $44,500. That’s over $27,760 saved in our client’s pocket instead of going to Federal & State taxes, in just the first year.  We’re pleased to see our clients put their hard earned money back into their business, improve their tax strategies, and build their wealth for retirement. With a proper tax plan in place, we set up our tax advisory clients for tax efficiency year after year.

As your tax advisory partner, we strive to be your business & accounting resource for success.

Our firm values the impact of our work helping small business owners to utilize the same tax strategies as the mega-wealthy.