Entity Structure & Owner Compensation Planning in Manassas, VA
How you structure your business and how you pay yourself are two sides of the same coin. The wrong combination—or an outdated setup—can cost you thousands every year in unnecessary taxes or create compliance headaches with the IRS.
At Hollins & Hur, we help established small businesses across Northern Virginia and DC align their entity structure with their owner compensation strategy. Entity structure + owner pay alignment prevents surprises and compliance issues.
Book a Tax Fit CallWhat This Service Covers (And Why It Matters)
Your entity structure (sole proprietor, LLC, S-Corp, etc.) determines how your business income is taxed. Your owner compensation strategy (salary, distributions, draws) determines when and how you access that income—and what taxes apply.
The problem: Most business owners set up their entity once and never revisit it—even as their income grows or circumstances change. Others have heard they "should be an S-Corp" but don't understand the tradeoffs or implementation requirements.
Our approach: We review your current setup, model different scenarios with real numbers, and help you understand the tax implications and compliance requirements of each option. Then you can make an informed decision—not just follow generic advice.
Why alignment matters:
- Misaligned structure and compensation leads to overpaying taxes
- Wrong S-Corp salary creates IRS audit risk or missed savings
- Proper documentation protects you from IRS scrutiny
- Right structure sets you up for growth, partners, or exit
Who This Is For
Entity structure and owner compensation planning is especially valuable if you fit any of these profiles:
What's Included in Entity & Owner Compensation Planning
We don't just tell you "be an S-Corp." We help you understand the full picture:
Common Problems We Solve With This Planning
We see the same issues repeatedly. Here's what trips up most small business owners:
The Big Decision Points (What We Evaluate)
Entity structure and owner compensation planning involves several interconnected decisions. Here are the key areas we evaluate:
LLC vs S-Corp Election
Should you stay as an LLC (taxed as sole prop or partnership) or elect S-Corp status? The answer depends on your income level, how much you reinvest in the business, and your tolerance for payroll compliance. We model both scenarios with your actual numbers.
Owner Pay Strategy (Salary, Distributions, Draws)
How you pay yourself depends on your entity type. S-Corps require reasonable salary plus distributions. LLCs typically use draws (subject to self-employment tax). Partnerships allocate income via K-1s. We help you structure the optimal mix for your situation.
For S-Corps specifically, we help document reasonable compensation to protect you from IRS scrutiny while maximizing your tax savings through distributions.
Impact on Quarterly Estimated Taxes
Your entity structure directly affects your estimated tax obligations. S-Corp owners with salary have withholding; distributions don't. LLC owners need to cover self-employment tax. We coordinate your compensation strategy with your quarterly payment plan.
Quarterly Estimated Tax PlanningYear-End vs January 1 Timing
Some entity changes can be made mid-year; others need to wait for January 1. S-Corp elections, for example, must be filed within 75 days of the start of the tax year (or the date you want the election to begin). We help you plan the timing to maximize benefits.
Year-End Tax PlanningMulti-State & DC Considerations
If you operate across Virginia, DC, and Maryland, your entity structure affects state filing requirements, nexus, and owner taxation. Some structures create more multi-state complexity than others. We help Northern Virginia business owners navigate these issues.
Multi-State & DC Tax PlanningOur Entity & Compensation Planning Process (3 Steps)
Tax Fit Call & Current Structure Review
We start with a call to understand your business, review your current entity structure, and analyze how you're currently paying yourself. If your books aren't current, we'll discuss cleanup first—accurate numbers are essential for accurate modeling.
Scenario Modeling & Tax Impact Analysis
We model different structure and compensation scenarios using your actual income and expenses. You'll see side-by-side comparisons: current setup vs. alternatives, including tax savings, compliance requirements, and implementation considerations.
Recommendations & Implementation Support
You get written recommendations with clear rationale and an implementation timeline. We coordinate with your attorney (for entity formation), payroll provider, and other advisors to ensure changes are executed correctly and at the right time.
If Your Books Aren't Tax-Ready, We Fix That First
Accurate entity structure and compensation analysis requires accurate numbers. If your books are behind or messy, we can't give you reliable modeling—we'd just be guessing, and guessing leads to bad decisions.
Here's our approach: If your books aren't current, we make them tax-ready first before providing final recommendations. This ensures our scenario modeling is based on real data, not assumptions.
This might mean a quick cleanup, or it might mean more substantial catch-up work. Either way, we'll be upfront about what's needed.
Once your books are clean, we can move forward with entity planning and seamlessly coordinate with tax return preparation when the year closes.
FAQs About Entity Structure & Owner Compensation
How do I know if my current entity structure is right?
It depends on your income level, growth trajectory, liability needs, and how you want to pay yourself. We review your situation and model the numbers to show you the tradeoffs—then you can make an informed decision.
What's the difference between salary, distributions, and draws?
For S-Corps, salary is subject to payroll taxes while distributions are not (within limits). For LLCs/partnerships, 'draws' are subject to self-employment tax. The key is finding the right structure and compensation mix that's defensible to the IRS while minimizing your overall tax burden.
Should I convert my LLC to an S-Corp?
Maybe—but not always. It depends on your income level, how much you need to retain in the business, administrative complexity you're willing to handle, and your state's requirements. We'll model the actual numbers to see if the tax savings justify the added compliance.
How often should I review my entity structure?
At minimum, annually during year-end planning. But any major change—significant revenue increase, new partners, expansion, or exit planning—is a good trigger to revisit the structure.
What's 'reasonable compensation' for S-Corp owners?
The IRS requires S-Corp shareholders who work in the business to pay themselves a 'reasonable salary' before taking distributions. What's reasonable depends on your role, industry, location, and company size. We help you document a defensible salary level.
Can you help me set up a new entity?
We focus on the tax planning and accounting side. For entity formation documents, we typically work alongside your attorney. We'll provide guidance on the tax implications of different structures and coordinate with your legal counsel on implementation.
What if I'm already set up wrong?
It's often fixable—but timing matters. Some changes can be made mid-year, others need to wait until January 1. We'll evaluate your situation, explain the options, and help you make the change at the right time to maximize benefits and minimize disruption.
Related Tax Planning Services
Entity structure and owner compensation planning connects to several other services. Explore related options:
Ready to Optimize Your Entity Structure & Compensation?
Stop wondering if your business structure is costing you money. Book a tax fit call and we'll review your current setup to see if there are opportunities to align your entity and compensation for better tax outcomes. Entity structure and owner compensation planning in Manassas, VA starts with a conversation.
Book a Tax Fit Call