The default advice for most small business owners who want to reduce self-employment taxes is to elect S-Corp status. And for the right situation, that's correct. But the reflexive assumption that an S-Corp is always better than a C-Corp ignores scenarios where the corporate flat tax rate—21% under TCJA and maintained under the OBBBA—produces meaningfully better after-tax outcomes. Understanding when a C-Corp wins requires looking at effective tax rates, retained earnings str

Self-employed business owners who choose a High-Deductible Health Plan (HDHP) gain access to one of the most tax-advantaged savings vehicles in the Internal Revenue Code: the Health Savings Account (HSA). The HSA is not an employer benefit—it's an individual account that you own, control, and take with you regardless of business changes. The combination of three separate tax advantages makes it unique among savings tools, and the ability to invest HSA funds creates a long-ter

Short-term rental platforms like Airbnb, VRBO, and Hipcamp have made it easy to turn a spare room or vacation property into income. What they haven't made easy is understanding the tax consequences. Short-term rental income doesn't fit neatly into a single tax category—depending on how many days you rent and how much time you spend managing the property, it can be treated as passive rental income, active business income, or even excluded from gross income entirely. Getting th

Small business owners who want to help employees pay for health insurance but cannot afford, or do not want to manage, a traditional group health plan may have two alternatives to consider: the Qualified Small Employer Health Reimbursement Arrangement, or QSEHRA, and the Individual Coverage Health Reimbursement Arrangement, or ICHRA. Both arrangements can allow employers to reimburse eligible employees for individual health insurance premiums and qualified medical expenses on

If your business carries debt—whether a line of credit, equipment loans, commercial real estate financing, or acquisition debt—you may be affected by the Section 163(j) limitation on the business interest expense deduction. Before 2018, interest on legitimate business debt was generally fully deductible. The Tax Cuts and Jobs Act capped that deduction for larger businesses and introduced a formula that limits deductible interest based on a percentage of a metric called Adjust

The Tax Cuts and Jobs Act introduced a limitation that surprises many business owners who have a large loss year: the excess business loss limitation under IRC §461(l). In plain English, this rule can stop you from using all of your business loss against other income in the current year. That does not mean the loss disappears. It means part of the deduction may be delayed and carried forward. This is one of the reasons tax planning across years matters. A loss year is not jus

Pass-through losses from an S-Corp or partnership flow through to your personal return on Schedule K-1. But a K-1 loss doesn't automatically translate into a deduction. Multiple limitation systems — including basis, at-risk, and passive activity loss rules — can block or defer that deduction, sometimes for years. Understanding how these work prevents surprises on your return and helps you plan around them. Basis Limitations In an S-Corp or partnership, your ability to deduct

If you're self-employed and paying for your own health insurance, you may be entitled to deduct 100% of your premiums without itemizing. It's one of the few above-the-line deductions that directly reduces your adjusted gross income, which can ripple through your entire return—affecting other calculations on the return, including QBI in some cases, eligibility for certain credits, and ultimately your tax bill. Many business owners either miss this entirely or set it up incorre

Starting a business often means losing money before making it. The IRS actually accounts for this. The Net Operating Loss (NOL) rules allow you to offset future profitable years with losses from less profitable ones—which is one of the reasons tax planning across years matters more than looking at any single year in isolation. What Is an NOL? A Net Operating Loss can occur when allowable deductions exceed income for the year, after the NOL rules make specific adjustments. Not

S-Corp owners often pay for business expenses out of pocket—mileage, home office, phone, supplies—and then either forget to reimburse themselves or run expenses through the S-Corp account in ways that create tax problems. An accountable plan solves this. It's not complicated, but getting it wrong costs money, and most S-Corp owners either don't have one at all or have one that doesn't actually work. Why This Matters for S-Corp Owners Specifically Unlike a sole proprietor, an

Making the S-Corp election is theoretically straightforward: file Form 2553, get confirmation, done. In practice, Form 2553 has a surprising number of failure points, and many business owners don't discover the problem until they're mid-audit or trying to prepare returns years after the fact. Here's where the election goes wrong. Missing the Filing Deadline For a calendar-year entity, the S-Corp election is generally due no more than 2 months and 15 days after the beginning o

Retirement planning is one of the few areas where the tax code is genuinely trying to help you. As a self-employed business owner, you have access to retirement vehicles that allow you to contribute significantly more than a traditional employee—and, in many cases, deduct contributions within IRS limits. The three most common options for small business owners are the SEP-IRA, the Solo 401(k), and the SIMPLE IRA. Each one fits a different situation. SEP-IRA (Simplified Employe

The state and local tax (SALT) deduction has been one of the most debated provisions in tax law since the TCJA capped it at $10,000 in 2018. The One Big Beautiful Bill Act raised that cap to $40,400 for 2026, with income-based phase-downs for higher earners. For small business owners — especially those in states with income tax — this changes the math on itemizing, entity structure, and pass-through entity tax elections. What Changed Under the TCJA, the SALT deduction for ind

heavy duty bulldozer heavy duty bulldozer When you buy equipment, a vehicle, or technology for your business, you generally can’t deduct the full cost in the year you purchased it. Depreciation spreads the deduction over the asset’s useful life. But Section 179 and bonus depreciation let you accelerate that deduction — sometimes taking the entire cost in year one. Knowing when to use each method is a significant tax planning lever. Section 179: Full Expensing in Year One Sect

Setting a reasonable salary for S-Corporation owners is one of the most critical tax issues these businesses face. Reasonable compensation is a recurring focus area in S-Corporation examinations because it directly affects employment tax reporting. Getting this wrong can lead to costly audits and penalties. This post breaks down what the IRS looks for, how to document your salary decisions, and why guessing a number can cause serious problems. IRS review of S-Corp salary docu

When tax season arrives, many small business owners face a crucial question: how does filing as a Schedule C sole proprietor differ from filing as an S-Corporation? Understanding these differences can save time, reduce stress, and potentially lower your tax bill. This post breaks down what changes and what stays the same at tax time when you move from Schedule C to an S-Corp. The goal is to give you clear, practical information so you can make informed decisions based on fact