Partner pay, S-corp structure, quarterly planning.
S-corp structure, owner pay split and quarterly planning for partner-run firms.
Partner pay is usually set by tradition
Agencies, consultancies and professional firms tend to arrive at owner compensation through habit. A founder takes draws, adds a W-2 salary at some round number, and the split never gets examined against the actual tax math.
For an S corporation, that split is the highest-leverage number in the business. It sets payroll tax, it caps retirement plan contributions, and it affects the qualified business income deduction, which for specified service businesses phases out at income levels many successful firms reach.
Lumpy revenue makes estimates a guess
Project-based firms have profit that arrives unevenly. A large engagement landing in the third quarter changes the year, and an estimated tax schedule set in April no longer reflects reality.
We recalculate quarterly against live books and provide both the safe-harbor number and the projected actual liability, so the firm knows whether to set cash aside rather than discovering the answer in April.
Multi-state client work
Serving clients in other states raises nexus and apportionment questions that most small firms never get a straight answer about. Whether you have a filing obligation depends on the state, the nature of the work, and in some cases whether anyone traveled there.
The practical approach is to identify actual exposure rather than either ignoring it or filing everywhere defensively. Additional state filings run a $75 processing fee here when they are required.
Retirement plans are the underused lever
For a profitable firm with few employees, retirement plan design is often the single largest available deduction, and the options differ substantially. A SEP is simple but ties contributions to employee coverage. A Solo 401(k) allows a larger contribution for an owner-only firm. A defined benefit or cash balance plan can absorb far more for older owners with high, stable income.
Because the contribution ceiling for an S-corp owner is calculated from W-2 wages, the plan decision and the salary decision have to be made together. That is exactly the kind of thing that falls between a payroll provider and a tax preparer, and does not fall between them here.
Talk through your professional services & agencies payroll
Bring your last return and a payroll register. We tell you what we would change and what it costs. No charge, no obligation.