A Conversation That Helped a Business Owner Ask the $25K Question
Sometimes the biggest wins in a financial plan don’t come from working harder or earning more. They come from seeing something others overlook — and knowing the right question to ask.
That’s exactly what happened when a fellow business owner and I got talking over dinner.
(Names and details have been changed, and this story is for educational purposes only. I’m obviously not a CPA or attorney, and nothing here is tax, legal, or financial advice. Always consult your own qualified professional before acting on any strategy.)
From Casual Chat to Curiosity
We were talking shop when he mentioned last year’s numbers: about $200,000 in revenue, around $150,000 after expenses.
For some, that’s a lot. For others, it’s a monthly figure. But the important part is this — he wasn’t “wealthy” by Wall Street standards. No family trust, no big investment portfolio. Just an honest, hardworking entrepreneur supporting his family.
Later, as we talked about his business, he let me look over a copy of his recent tax return. Something caught my eye: a significant self-employment tax bill — well into the five figures.
The Question That Changed the Conversation
I asked a simple question: “Has anyone ever walked you through whether an S-Corporation could be a good fit for your business?”
He said his CPA had mentioned it once in passing, but nothing ever came of it.
Now — electing S-Corp status isn’t always the right move. It comes with payroll requirements, clean books, and trade-offs that need careful analysis. But in some situations, it can reduce self-employment tax by changing how business income is split between salary and distributions.
So I encouraged him to have another conversation with his CPA — this time with a specific goal and the right supporting information to explore it seriously.
Taking It to the Professionals
He took that idea back to his CPA, who reviewed the situation in light of IRS rules. It turned out there was even a possibility to request a late S-Corp election — something the IRS sometimes allows if a business can show it’s already been operating in a way consistent with S-Corp requirements.
His CPA filed the paperwork, and after a few months, the IRS approved it. The result: a substantial refund from the prior year and the potential for ongoing tax efficiency in future years.
Why This Matters
This wasn’t about gaming the system. It was about stewardship — using the tools available under the law to avoid paying more tax than necessary.
Hard work had clearly gotten him far, but wise counsel helped him keep more of what he earned. Without asking that extra question, this business owner would have continued paying more in taxes than required, simply because the conversation had never happened.
What You Can Learn From This
If you own a business and have never discussed your entity structure in depth with a tax professional, you might be leaving opportunities on the table.
Has anyone reviewed whether your business structure still fits your situation?
Do you understand how your income is taxed and whether there are alternatives?
When was the last time you got a second opinion?
The goal isn’t to “find a loophole.” It’s to be intentional with what you’ve been given — and sometimes that starts with asking one more question.
Disclaimer: This article is for educational purposes only and is not financial, legal, or tax advice. Every business owner’s situation is different, and the results in this story are not typical or guaranteed. Always consult a qualified professional before making any changes to your tax or business structure.