For people who own the business and work in it.
Self-Employed and S-Corp CPA in the Roaring Fork Valley
Single-member LLCs, S-corp owners, real estate agents, law firm partners, contractors, and everyone else across the valley running their own show. The tax questions that matter most here are structural: how you're set up, how you pay yourself, and what you're doing about the self-employment tax bill nobody warned you about.
From small business owners
What clients say
Highly recommended. Stephen is a great resource for tax prep and filing. He really takes the pain out of the process and so appreciate him for being able to help a small business person like myself. Looking forward to his assistance for years to come.
Has greatly helped me with sorting out issues with IRS, taxes and complicating factors regarding small business. I have referred multiple friends with small businesses taxes and they all have raved about his help
His proactive approach has helped us stay ahead of potential issues and make more informed financial decisions. From routine filings to more nuanced tax planning, SR2 Accounting has been a reliable and trusted partner for our law firm.
Salary and distributions
The S-corp decision
Electing S-corp status lets an owner split what the business pays them between a W-2 salary and distributions, and only the salary carries employment tax. That split is the entire tax benefit, and it's also the entire risk, because the salary has to be reasonable for the work being done.
When an election makes sense
It turns on profit, not revenue, and it isn't free. An S-corp means payroll, a separate return, and more administration. Below a certain level of profit the savings don't cover the cost of the structure. Above it, they compound every year you wait.
Payroll and distributions
Once the election is in place, the mechanics have to actually happen. Real payroll, real filings, distributions recorded as distributions. An S-corp election that exists on paper but not in the books is worse than not electing at all.
What the IRS looks at
Reasonable salary for S-corp owners
The most common mistake we correct is an owner paying themselves a salary far below what the work is worth, on the theory that a lower salary means less employment tax. That's the part the IRS looks at, and it's the part that gets adjusted. A defensible salary is one you can support with something more than a preference.
Setting it too high has a cost too, because every extra dollar of salary carries employment tax the distribution wouldn't have. The goal is a number that fits the work you actually do, written down with the reasoning behind it.
Often missed
S-corp officer health insurance
Health insurance for a more-than-2-percent S-corp shareholder has its own handling, and it's one of the most commonly missed items on a small S-corp return. The premiums have to run through the corporation and be reported on the officer's W-2, and only then does the deduction land where it should on the personal return.
Miss the W-2 reporting and the deduction is either lost or claimed in a way that doesn't hold up. It's a bookkeeping and payroll sequencing issue more than a tax law issue, which is exactly why it slips past a preparer who only sees the file in March.
If you own an S-corp and pay for your own health insurance, check this against your last two W-2s.
Both halves
Self-employment tax
Self-employment tax is the part that surprises people in their first profitable year. As an employee, your employer covers half of Social Security and Medicare. Working for yourself, you cover both halves, on top of income tax.
Deductions owners miss
Home office, mileage and vehicle treatment, equipment and depreciation choices, health insurance, and retirement contributions. None of these are exotic. They get missed because nobody is looking at the business until the return is being prepared, by which point the substantiation either exists or it doesn't.
Quarterly estimates
Estimates are how the self-employed avoid an April bill they can't cover and the penalty on top of it. Set correctly, they're boring. Set from last year's numbers in a year that grew, they're a problem.
SEP IRA or solo 401(k)
Retirement contributions and your taxes
Owning a business opens up retirement plans an employee doesn't get, like a SEP IRA or a solo 401(k). Each one is funded differently, and each one shows up differently on your return, so the choice between them is partly a tax question.
We work through that tax side with you: how much the business or you can contribute, where the deduction lands, and how the timing lines up with your filing. The investments inside the plan are a conversation for your financial advisor.
Where planning starts
Clean books make planning possible
Every strategy on this page depends on knowing where the business actually stands before the year ends. That's a bookkeeping question before it's a tax question.
Monthly bookkeeping with real bank and account reconciliations means we can answer a question in October instead of discovering the answer in March. If your books have fallen behind, cleanup is its own piece of work and we do it.
How pricing works
We bill hourly for tax compliance work instead of selling fixed packages or tiers. What a return costs depends on how complex it is, and you get an estimate before we start.
S-corps and payroll
Common questions
Should I elect S-corp status?
It depends on your profit, not your revenue, and on whether you're willing to run real payroll. There's a level of profit below which the savings don't cover the added cost and administration. We can run your actual numbers rather than give you a rule of thumb.
How much should I pay myself as an S-corp owner?
Enough to be reasonable for the work you do, which is the standard that matters. Setting it artificially low is the most commonly adjusted position on a small S-corp return. We help you land on a number you can support.
Should I use a SEP IRA or a solo 401(k)?
It depends on your income, whether you have employees, and how much you want to put away. The two plans are funded differently and show up differently on your return. We walk through the tax side of each with you, and your financial advisor handles the investments inside the plan.
I just started working for myself. When should I talk to a CPA?
Before your first profitable year ends, ideally in the first few months. Entity structure, estimated payments, and how you track expenses are all much cheaper to set up correctly than to fix later.
Can you do my bookkeeping as well as my return?
Yes, and it's the combination that makes the planning work. It isn't required. If your records are reliable we can work with what you have.
I'm behind on my books. Is that a problem?
It's common and it's fixable. Cleanup is scoped separately from ongoing bookkeeping so you know what it involves before we start.
Working for yourself? The structure decisions pay for themselves.
Send us a message, or call (970) 315-2991.