Business Owner & Small Business Tax Services

Business owners face a uniquely complex tax landscape. From entity selection to reasonable compensation to retirement plan design, every decision has tax consequences. AE Tax Advisors helps you structure your business and personal finances to minimize your combined tax liability.

S-Corp Reasonable Compensation: Getting It Right

We regularly identify S-Corp owners paying themselves $40K-$60K on businesses generating over $1M in revenue. The IRS considers this unreasonably low and it creates significant audit risk. Our analysis sets compensation at a defensible level - typically $90K-$130K for million-dollar businesses - while maximizing the distribution savings. The difference between getting this right and getting it wrong can mean the difference between a clean return and an IRS reclassification that triggers back payroll taxes, penalties, and interest.

Accountable Plans: Recover Lost Deductions

An accountable plan under IRC §62(a)(2)(A) allows your S-Corp to reimburse you for home office expenses, vehicle use, cell phone, internet, and business travel. For clients with home offices and regular business use of personal assets, this typically recovers $12,000-$20,000 per year in deductions that were lost when the TCJA eliminated unreimbursed employee expenses. Without an accountable plan, these expenses simply vanish from your tax return - even though you are still paying them out of pocket every month.

Augusta Rule: Tax-Free Rental Income from Your Own Home

Under IRC §280A(g), business owners can rent their personal residence to their business for up to 14 days per year without reporting the rental income. At fair market rental value, this creates a deductible business expense of $1,200-$2,000 per day in most markets - a potential $16,800-$28,000 annual deduction. The business gets the deduction, and the rental income is excluded from the owner's personal return entirely. We handle the fair market value documentation, board resolutions, and compliance requirements to ensure this strategy is audit-proof.

Medical Expense Reimbursement Plans (MERP)

A Medical Expense Reimbursement Plan (MERP) under IRC §105(b) allows C-Corps and S-Corps (with proper structuring) to deduct 100% of medical expenses including premiums, deductibles, copays, dental, vision, and even cosmetic procedures. For business owners with high out-of-pocket medical costs, this can generate $15,000-$40,000 in additional deductions. Most business owners have no idea this is available because their prior CPA never set one up. We design and implement MERP plans that convert personal medical expenses into fully deductible business expenses.