Tax strategy is not tax preparation
Tax preparation is backward-looking. It takes the year's transactions and calculates the bill. Tax strategy is forward-looking. It makes decisions during the year — about compensation, contributions, purchases, and timing — that change what the bill will be. Most business owners have a good CPA doing the first job. Very few have anyone doing the second.
The gap costs real money. A business owner who waits until March to learn what the tax bill is has already missed every opportunity to change it. The Roth conversion window closed in December. The retirement plan contribution deadline passed. The equipment purchase that would have generated a deduction happened in January of the wrong year.
We fill that gap. We sit between the business owner and the CPA, making planning decisions throughout the year and coordinating with the CPA so the return reflects a strategy rather than an accident.
Tax strategy is the thread that runs through every piece of the business financial planning we do with owners across Northern New Jersey. Entity structure, compensation, retirement plans, and exit planning are all tax conversations at their core.
Entity structure — the foundation of the tax plan
The entity type determines how income flows to the owner and how it is taxed. A sole proprietor pays self-employment tax on all net income. An S-corp owner pays payroll tax on a reasonable salary and takes the rest as a distribution not subject to self-employment tax. A C-corp pays its own income tax and the owner pays again on dividends. Each structure has advantages and costs, and the right one depends on the specific numbers.
We model each structure against the owner's actual income, expenses, and personal tax situation. For a business earning $150,000, the S-corp election might save $8,000 a year in self-employment tax. For a business earning $600,000 with a high-savings-rate owner, the combination of an S-corp and a defined benefit plan can save multiples of that. The analysis takes an hour. The savings last for years.
Retirement plans as the largest tax lever
For business owners, retirement plan contributions are often the single largest tax deduction available. A SEP-IRA allows contributions of up to twenty-five percent of compensation. A Solo 401(k) allows employee deferrals plus employer contributions. A defined benefit plan — available to any business, including solo practices — can shelter over $200,000 a year for owners in their fifties and sixties.
The right plan depends on the owner's age, income, number of employees, and savings goals. A young owner with moderate income is well-served by a Solo 401(k). An older owner with high income and no employees is the ideal candidate for a defined benefit plan. A business with employees needs a plan structure that balances the owner's benefit with the cost of covering the team.
We design the plan structure and coordinate with third-party administrators on setup. We do not sell plan products and we earn no commissions from any recordkeeper or provider. The recommendation is based on the math, not on a product relationship.
The personal side of the tax picture — Roth conversions, capital gain timing, deduction bunching — connects to the year-round tax strategy we coordinate across the full household.
“The CPA files the return. We make the decisions during the year that determine what the return looks like. Both jobs matter. They are not the same job.”
What working with us looks like
First meeting — the business tax picture
We sit down with the last two years of business and personal returns, a current-year P&L, and the owner's compensation structure. We model the entity structure, the compensation, and the retirement plan options. Ninety minutes is usually enough to see the strategy.
Written tax strategy and year-round coordination
You leave with a document that names the entity structure recommendation, the compensation level, the retirement plan design, and the estimated tax savings. We coordinate with your CPA throughout the year on estimated payments, timing decisions, and year-end planning.
A note on fit
When this might not be right for you
Business tax strategy is not the right fit for every owner:
- Anyone looking for a CPA to prepare business tax returns. We plan — we do not file.
- Anyone whose business income is low enough that the standard deduction and a simple IRA cover the situation. We will say so.
- Anyone who wants aggressive tax positions outside the law. We plan conservatively and coordinate with counsel.
If any of those describe you, we will say so on the first call.
Frequently asked questions
Do you prepare business tax returns?
No. We provide tax strategy — the planning decisions made throughout the year that shape the return. Your CPA prepares the return. We coordinate with them and share the information they need.
Should my business be an S-corp?
It depends on the net income, the owner's reasonable salary, and the administrative cost of the election. We model the S-corp against the current structure and recommend the switch only when the math clearly supports it. For many businesses, the savings are significant.
What retirement plan is best for a business owner?
It depends on income, age, number of employees, and savings goals. A Solo 401(k) works well for younger owners with moderate income. A defined benefit plan can shelter over $200,000 a year for older owners with high income. We model the options and recommend the plan that fits.
How much can a defined benefit plan save in taxes?
For a high-income owner in their fifties or sixties, a defined benefit plan can shelter $200,000 or more per year, reducing the combined federal and New Jersey tax bill by $60,000 to $100,000 annually. The exact savings depend on the owner's income, age, and tax bracket.
Do you sell retirement plan products?
No. We are fee-only fiduciaries. We design the plan structure and coordinate with third-party administrators on setup. We earn no commissions from any recordkeeper, custodian, or plan provider.
How do you work with my CPA?
We make the planning decisions — compensation levels, contribution amounts, timing of purchases and payments — and share the details with your CPA so they can prepare the returns accurately. We talk throughout the year, not just at tax time.