CPA Services for Small Business Owners (S-Corp / LLC)

Who This Is For

Owner-operators of service businesses, trades, retail and online stores, small construction firms, healthcare practices, and any closely-held business with $50K-$5M in annual revenue and 1-25 employees.

Top Tax Issues for Small Business Owners

• S-Corp reasonable compensation enforcement

  Owners of S-Corps must pay themselves reasonable W-2 compensation before drawing distributions. Setting wages too low is one of the IRS's top S-Corp audit triggers and leads to back FICA assessment plus penalties.

• Section 199A QBI deduction phaseouts

  Pass-through business owners can deduct up to 20% of Qualified Business Income, but income thresholds and SSTB restrictions complicate planning. Wage and Unadjusted Basis Immediately after Acquisition (UBIA) limitations kick in at higher income levels.

• Payroll tax compliance (Form 941, 940, state returns)

  Quarterly federal payroll (Form 941), annual federal unemployment (Form 940), state income tax withholding, state unemployment insurance, and worker's comp create a compliance calendar that small businesses commonly miss.

• Multi-state tax obligations from remote workers

  Hiring remote employees in another state typically creates payroll tax registration, state income tax withholding, and sometimes state corporate income tax nexus. Each state's rules differ.

Strategies TS CPA Uses

• S-Corp election (Form 2553) when net income justifies it

  Once net business income reliably exceeds $50K-$80K, S-Corp election typically saves more in self-employment tax than the cost of payroll and a separate return. We model the breakeven each year.

• Section 168(k) bonus depreciation and Section 179 expensing

  OBBBA permanently restored 100% bonus depreciation for assets placed in service after January 19, 2025. Combined with Section 179 expensing (up to $1.16M for 2024), small businesses can fully expense most equipment purchases in the year of acquisition.

• Pass-Through Entity Tax (PTET) election (where available)

  In ~36 PTET states, the entity pays state tax and deducts it federally: converting non-deductible state taxes (capped under SALT) into federally-deductible business expense. Owners receive a state tax credit.

• Retirement plan adoption (Solo 401(k), SEP-IRA, Defined Benefit)

  Small business owners have access to retirement plans that allow $70K+ in annual deductions (Solo 401(k)) and $200K+ for older high-income owners (Defined Benefit / Cash Balance). The right plan depends on age, profit, and family-employment situation.