Key Takeaways
- The big money is in structure, not receipts: entity election, retirement plan design, and the QBI deduction dwarf meal write-offs.
- An S-corp election can cut self-employment tax once profits clear roughly six figures, if you pay yourself a defensible salary.
- A cash-balance plan stacked on a 401(k) can shelter well over $100,000 a year for older high-profit owners.
Most business owners hunt deductions at the wrong altitude, chasing hundred-dollar write-offs while leaving five-figure structural savings unclaimed. The durable tax advantages of ownership are architectural: how the entity is taxed, how retirement plans are designed, how the qualified business income deduction is protected, and how state taxes are routed.
Here is the stack in order of typical impact for a profitable owner. Every item deserves coordination between your planner and CPA, which is precisely the coordination most owners never get.
Entity Election and the S-corp Question
A sole proprietorship or single-member LLC pays self-employment tax on essentially all profit. An S-corp election splits profit into a reasonable salary, which bears payroll tax, and a distribution, which does not. Once profits comfortably exceed a defensible salary for your role, the payroll-tax savings can reach five figures annually, net of payroll and filing costs. The salary must be defensible; an implausibly low one is a classic audit flag.
The election interacts with the QBI deduction and retirement plan contributions, so model the whole system, not the payroll-tax line alone.
Retirement Plans as a Tax Valve
A solo 401(k) lets an owner defer as employee and profit-share as employer, a combined limit of $72,000 for 2026 before catch-ups. Owners past their forties with strong profits can stack a cash-balance defined-benefit plan on top, sheltering an additional six figures a year in the right circumstances, with contribution ranges set actuarially by age and income. For owners with employees, plan design determines how much of the benefit you keep versus fund for staff, and safe-harbor designs manage that trade explicitly.
Try it: the free The Wealth Checkup takes a couple of minutes and shows you where you stand. Or explore tax planning at Attend.
QBI, PTET, and the State Layer
The qualified business income deduction shields up to 20% of pass-through profit, with phaseouts and service-business limits that planning can sometimes manage: retirement contributions that pull income under thresholds are the common lever. Separately, most states now offer a pass-through entity tax election, Georgia included, letting the business pay state income tax at the entity level where it remains fully deductible federally, effectively bypassing the SALT cap for business income. For many owners the PTET election is worth thousands and takes one form.
The Honest Version of the Small Stuff
Yes, deduct the real things: the home office if it is genuinely your principal place of business, business miles, the Augusta rule's 14 days of tax-free home rental to your business when properly documented, and wages to your children for real work at real rates, which shifts income to their bracket and can fund their Roth IRAs. Just keep proportion: this layer is worth hundreds or a few thousand, while the structural layers above are worth tens of thousands.
We build the full stack with owners in tax planning and equity and business planning, alongside the estimated-tax system that keeps it all penalty-free.
Frequently Asked Questions
At what profit level does an S-corp make sense?
A common rule of thumb is when profit comfortably exceeds a reasonable salary for your work, often around $80,000 to $100,000, so there is genuine distribution income to exempt from payroll tax after administrative costs.
Can I still open a retirement plan for last year?
Solo 401(k)s must generally exist by year-end to accept employee deferrals, but employer contributions, and SEP-IRAs entirely, can often be made up to the filing deadline including extensions. Deadlines differ by plan, so check before assuming.
Is the home office deduction an audit trap?
Not when legitimate. The space must be used regularly and exclusively for business. The simplified method, a set rate per square foot, keeps documentation light.
Tony leads Attend Wealth, a fee-based wealth management firm in Atlanta serving professionals, families, and business owners. Advisory services are held to a fiduciary standard. More about Attend
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