Most business owners treat tax like an afterthought. They hand their CPA a shoebox of receipts every April and ask, “What do I owe?” That question is the most expensive in business.
A real tax plan isn’t a once-a-year event. It’s a strategy that runs all year long, reviewed at a minimum quarterly, ideally monthly. The difference between those two approaches is the difference between keeping your money and handing it to the IRS because you never built a plan to keep it.
I’ve watched business owners sell companies for millions and lose a fortune in tax simply because nobody sat down with them in advance. I’ve also watched a client sell his company for $11 million and keep $1.7 million more than he would have, because we started planning the sale years before it happened.
This is what tax strategy actually looks like. Not a filing deadline. A system.
Your CPA Is a Historian, Not a Strategist
Most CPAs are historians. They document what has already happened and make sure your return is filed by April 15th. That’s not a plan. That’s a record.
A strategist works differently. We meet at the start of the year and ask what you’re going to make, what you want to invest in, and whether you’re adding to a retirement account. Then we meet quarterly. If you’re making millions, we meet monthly. Yes, you pay for that strategy. The alternative is paying the IRS instead, and the IRS never sends you a thank-you note for the tip.
The tax code is public. It’s on the internet, laid out in detail. But knowing it exists and knowing how to use it are two different skills, just as anyone can look up how surgery works without being qualified to perform one. You don’t do your own surgery. Don’t do your own taxes.
“Are you going to pay for the strategy and keep your taxes low, or overpay the IRS because you don’t have a plan?”
Choose Your Tax Structure: Employee or Owner
There are two tax systems in America, and in principle, in most of the world. You can be an employee, taxed on every paycheck before you ever touch it, living on what’s left. Or you can be an owner, employed by your own company, running your life through a corporate structure that opens up deductions an employee will never see.
You choose which system you live in. Most people never realize it’s a choice.
This applies even if you can’t leave your job. A firefighter, a teacher, or anyone locked into employee status as their primary source of income can still build a corporate life alongside it. In my own world, I run four corporate structures, each strategically aligned and contracted to keep tax as low as legally possible. Those entities can manage intellectual property, run operations, and hold assets, all while working together to reduce the amount that flows through to my personal return.
The deadline changes, too. Employees’ file on April 15th. Businesses run on a different clock. I still haven’t paid my full 2025 tax bill. I’m on extension, paying September 15th and October 15th, because by the time that money is due, we’ve already built the strategy for the following year. We close the books and cycle again.
How I Pay Myself (And Why It’s Only $42,000)
Once a business owner crosses roughly $150,000 to $250,000 in income, it’s time for another entity. The strategy gets more sophisticated, and so does the payroll decision.
Here’s the formula I use to pay myself: whatever can legally move through the corporate structure as a deduction does. Phone, vehicle, wardrobe when it qualifies, meals, home office, technology, and hiring your own kids. All of that runs through the company. What’s left over, typically seven to twelve things that genuinely can’t be moved through an entity, is what I pay myself personally.
Right now, that number is about $42,000. When my daughter goes back to school, it drops to $36,000. People assume that means I’m living on nothing. I’m not. Most of my life is treated as a legitimate business deduction because I operate multiple businesses with a wide range of deductible activities.
If you’re structured as an S Corporation, this gets more precise. The IRS expects reasonable compensation comparable to your industry before you take distributions, so the split between salary and distribution has to be built carefully, not guessed at with a TurboTax dropdown menu.
“Most of you just make money, get taxed, and live on what’s left. That’s an interesting choice when you have other choices.”
Selling Your Business? Clean It Up First
Eventually, most owners either sell the business or hand it down. The tax strategy for that exit has to start long before the sale, not the week you sign the letter of intent.
Here’s the problem. All those legal deductions you’ve been running through the company, the vehicle, the family salaries, the travel, are part of your lifestyle, not necessarily part of what a buyer wants to pay for. If you employ four kids and the new owner has none, that owner isn’t buying four salaries. Before a sale, the core business needs to be forensically clean from an accounting standpoint so a buyer can evaluate it without untangling your personal choices from the company’s real performance.
If there’s a 401(k) inside the business, disconnect it and self-direct it into your own account before the sale closes. And think through how you’ll invest the proceeds before the wire hits your account, because how you make the money, how you deduct against it, and how you invest it afterward are three parts of the same strategy, not three separate decisions.
Start Today
You don’t need to overhaul everything by Friday. You need to start the sequence.
- Find out which entity structure fits your income level right now: LLC, S Corp, C Corp, or a layered combination. Don’t file it yourself at the Secretary of State. Let a corporate specialist do it so the documents are built correctly from day one.
- Calculate your real personal number: the handful of expenses that truly can’t move through a corporate deduction. That number becomes your salary.
- If you’re within a few years of selling, start the cleanup now. Buyers pay for clean numbers, not your lifestyle.
- Book a quarterly review with a tax strategist, not a once-a-year filing appointment.
None of this requires you to become a tax expert. It requires you to stop treating tax as something that happens to you every April and start treating it as a plan you build every year.
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