- Home
- Tax planning & business setup
Tax planning in Indianapolis, done while there's still time to change the answer
By April, the year's decisions are already made. Planning happens in the fall: how your business is taxed, what you pay yourself, what goes into retirement accounts, and how much to send the IRS each quarter.
When an S-corp election pays
As a sole proprietor, every dollar of profit carries 15.3% self-employment tax on top of income tax (the Social Security part stops at $184,500 of earnings in 2026). An S-corp lets you split profit into a salary, which carries payroll tax, and distributions, which don't.
The catch is the salary. The IRS expects a reasonable wage for the work you do, and an S-corp adds real costs: payroll, a separate 1120-S return due March 15, and more bookkeeping. For many owners the savings start once profit is comfortably past the owner's reasonable salary. Below that, the extra costs can eat the benefit.
The timing rule
Form 2553 has to be filed within two months and 15 days of the start of the tax year the election should apply to. For a calendar-year business that's March 15. Late elections can sometimes be fixed, but it's easier to plan in the fall and file on time.
Choosing an entity
| Structure | How it's taxed by default | Worth a look when |
|---|---|---|
| Sole proprietorship | Schedule C on your 1040 | You're starting out or profit is modest |
| Single-member LLC | Same as a sole proprietorship | You want liability separation without new tax returns |
| Multi-member LLC or partnership | Form 1065, K-1s to each owner | Two or more owners splitting profit their own way |
| LLC or corporation taxed as an S-corp | Form 1120-S plus owner payroll | Profit well above a reasonable salary |
| C corporation | Form 1120, 21% corporate rate | Keeping profit in the company, or outside investors |
We handle the tax side: the EIN, the election, the payroll setup and the first returns. For the operating agreement and liability questions, we work alongside your attorney.
Estimated taxes without surprises
If no one withholds tax from your income, the IRS expects four payments: April 15, June 15, September 15 and January 15. The safe-harbor rule keeps the underpayment penalty away: pay at least 100% of last year's total tax (110% if your adjusted gross income was over $150,000), or 90% of this year's.
A planning session turns the January surprise into four payments you knew were coming.
For W-2 households, the same idea runs through the W-4. We adjust it so your withholding lands close to what you actually owe.
Retirement contributions
- IRA and Roth IRA$7,500 for 2026, plus $1,100 more if you're 50 or older. Contributions count for 2026 until the April 2027 filing deadline.
- SEP-IRAFor self-employed owners. Can be funded up to the extended due date of the return.
- Solo 401(k)Owner-only businesses. The setup and deferral-election dates are strict, so decide before December 31.
- HSA$4,400 self-only or $8,750 family coverage for 2026, with a high-deductible health plan.
What to bring
Planning questions
No. An LLC is a legal structure formed with the state. An S-corp is a tax election filed with the IRS. An LLC can choose to be taxed as an S-corp, but it isn't one automatically.
Low enough to be defensible and no lower. The IRS looks at what you'd pay someone else to do your job. A salary set far below that is a common audit issue, and the fix can include back payroll tax and penalties.
September through early December. There's enough of the year behind you to project the numbers and enough left to act on them.