S-Corp Tax Planning in Manassas, VA
S-Corp status can save you thousands in self-employment taxes—but only if it's the right fit and you're running it correctly. The savings only work when you align reasonable salary, distributions, bookkeeping, and quarterly estimates.
At Hollins & Hur, we help established small businesses across Northern Virginia and DC evaluate, implement, and optimize S-Corp tax strategies. If you're already an S-Corp, we make sure you're getting the full benefit without the compliance risk.
Book a Tax Fit CallWhat S-Corp Tax Planning Actually Means
S-Corp tax planning isn't just "become an S-Corp and save money." It's about aligning multiple moving parts: your reasonable salary, distribution timing, quarterly estimated payments, and clean bookkeeping. When these work together, you minimize self-employment tax while staying compliant.
The core benefit: As an S-Corp owner-employee, you pay yourself a "reasonable salary" (subject to payroll taxes) and take additional profits as distributions (not subject to self-employment tax). The savings come from the distributions—but only if your salary is defensible.
The catch: S-Corp savings only work when run correctly. Set your salary too low, and you're at IRS audit risk. Set it too high, and you're missing the savings. Skip quarterly estimates on distributions, and you'll owe penalties. Let your books fall behind, and you can't make informed decisions.
What we help you coordinate:
- Reasonable salary that's defensible and tax-efficient
- Distribution strategy that maximizes tax savings
- Quarterly estimates so you're not hit with penalties
- Clean books so we can make data-driven recommendations
Who This Is For
S-Corp tax planning is especially valuable if you fit any of these profiles:
What's Included in Our S-Corp Tax Planning Service
We don't just tell you to "pay yourself a salary." We help you get the full picture:
The 3 Biggest S-Corp Planning Levers
S-Corp tax planning comes down to optimizing three interconnected areas. Get these right, and the savings compound:
Reasonable Salary Strategy
Your salary is the foundation. Set it too low, and the IRS can reclassify distributions as wages and hit you with back taxes plus penalties. Set it too high, and you're paying more payroll tax than necessary.
We help you determine a salary that's defensible based on industry benchmarks, your role, hours worked, and comparable positions in the Northern Virginia/DC market. We also document the rationale so you're protected if questioned.
Entity Structure & Owner CompensationDistribution Strategy
Distributions are where the savings happen—they're not subject to self-employment tax. But distributions require cash, and you can only take them after you've paid yourself a reasonable salary.
We help you time distributions based on cash flow, coordinate with retirement contributions, and ensure you're not taking more than the business can support. The goal is maximum tax efficiency without creating cash crunches.
Quarterly Estimated Tax Payments
Your salary has taxes withheld, but distributions don't. Many S-Corp owners forget this and end up with underpayment penalties at tax time. We coordinate your salary withholding with estimated payments on distributions so you're covered.
Quarterly Estimated Tax PlanningCommon S-Corp Mistakes We Help Prevent
We see these S-Corp issues repeatedly. Here's what trips up most small business owners:
Our S-Corp Tax Planning Process (3 Steps)
Tax Fit Call & S-Corp Assessment
We start with a call to understand your business, review your current setup (or evaluate if S-Corp makes sense), and analyze your income patterns. If your books aren't current, we'll discuss cleanup first—accurate numbers are essential for accurate planning.
Salary & Distribution Optimization
We determine your reasonable salary using industry benchmarks and model different salary/distribution splits. You'll see the tax impact of various approaches so you can make an informed decision—not just follow generic advice.
Implementation & Ongoing Coordination
We help you implement the plan—payroll setup, election filings, estimated payment schedules—and coordinate with your team. We monitor your situation and adjust the strategy as your business evolves throughout the year.
Year-End Planning Is Where You Still Have Leverage
For S-Corp owners, year-end is critical. It's your last chance to adjust salary, time distributions, make retirement contributions, and take other actions that affect your tax bill.
Key year-end S-Corp decisions: Should you increase your Q4 salary to maximize retirement contributions? Take additional distributions before December 31? Prepay expenses? Time bonus payments? These decisions can significantly impact your tax outcome.
We recommend starting year-end planning in October or November so you have time to implement strategies before the deadlines.
Learn more about Year-End Tax PlanningIf Your Books Aren't Tax-Ready, We Fix That First
Accurate S-Corp planning requires accurate numbers. If your books are behind or messy, we can't determine the right salary level or model distribution strategies—we'd just be guessing.
Here's our approach: If your books aren't current, we make them tax-ready first before providing final recommendations. This ensures our salary benchmarking and distribution modeling is based on real data.
Once your books are clean, we can move forward with S-Corp planning and coordinate with:
- • Tax return preparation (Form 1120-S and K-1s)
- • Payroll tax filings (Form 941, 940, state filings)
Multi-State + DC/MD Considerations
If you're an S-Corp operating across Virginia, DC, and Maryland, there are additional considerations. Each jurisdiction has its own S-Corp filing requirements, and some have entity-level taxes.
Virginia: Pass-through entity tax election available. DC: Has a franchise tax that applies to S-Corps. Maryland: Pass-through entity tax election available.
We help Northern Virginia S-Corp owners navigate multi-state complexity, understand nexus implications, and optimize for the regional tax environment.
Learn more about Multi-State & DC Tax PlanningFAQs About S-Corp Tax Planning
What is a 'reasonable salary' for an S-Corp owner?
It varies based on your industry, role, location, hours worked, and what similar positions pay. The IRS looks at whether your salary is comparable to what you'd pay someone else to do your job. We help you find a defensible number that balances tax savings with compliance.
How much can I save with an S-Corp election?
It depends on your income level and how much you can reasonably distribute after paying yourself a fair salary. Some owners save $5,000-$20,000+ per year; others find the savings don't justify the added complexity. We model your specific situation to show the real numbers.
When does S-Corp election make sense?
Generally when your net income is consistently above $50-60K and you can reasonably pay yourself a salary while still having meaningful distributions. But the math varies by situation—we'll run the numbers for you.
What are the downsides of S-Corp status?
More administrative requirements: payroll setup and filings, reasonable salary documentation, potential state-level taxes, and stricter record-keeping. We help you weigh the tax savings against the added complexity and cost.
Can you help me file Form 2553 for S-Corp election?
Yes. We can help you elect S-Corp status with the IRS, including late elections when possible. We'll also coordinate the state-level requirements for Virginia, DC, and Maryland.
What happens if I don't pay myself a reasonable salary?
The IRS can reclassify your distributions as wages and assess back payroll taxes, plus penalties and interest. This is one of the most common S-Corp audit triggers. We help you document a defensible salary to avoid this risk.
How often should I review my S-Corp salary?
At minimum, annually during year-end planning. You should also revisit when your income changes significantly, you take on new responsibilities, or industry compensation standards shift. We monitor this as part of our ongoing planning service.
Related Tax Planning Services
S-Corp tax planning connects to several other services. Explore related options:
Ready to Optimize Your S-Corp Strategy?
Stop wondering if your S-Corp is set up right. Book a tax fit call and we'll review your salary, distributions, and overall strategy—or help you decide if S-Corp status makes sense. S-Corp tax planning in Manassas, VA starts with a conversation.
Book a Tax Fit Call