For high earners, strategic tax mitigation is a primary wealth-building tool, not just a way to save money. The capital saved from taxes represents a guaranteed, passive investment return. This reframes tax planning from a compliance chore to a core financial growth strategy.

The optimal founder salary is a balancing act. It should be the largest amount the business can sustain without taking a hit, yet the smallest amount you can personally live on comfortably. This strategy frees up the maximum amount of capital for strategic reinvestment into the business's growth.

If a 401(k) plan allows it, high earners can make after-tax contributions beyond standard limits and then convert those funds to a Roth account within the plan. This strategy bypasses typical Roth income limitations, creating a large, tax-free growth vehicle for retirement.

The potential for a massive tax-free exit under the Qualified Small Business Stock (QSBS) rule often outweighs the short-term pain of double taxation from a C-Corp structure, especially for founders targeting a multi-million dollar sale.

For business owners with high income and few or no employees, a defined benefit pension plan can offer significantly larger tax deductions than standard retirement plans like a 401(k), potentially allowing for write-offs exceeding half a million dollars.

Don't rush to form an S-Corp. The tax savings typically don't outweigh the added costs and complexity, like running payroll, until your business is generating at least $60,000 to $80,000 in profit. Before that, a sole proprietorship or standard LLC is often more efficient.

An LLC is a legal designation for liability protection, not a tax classification in the eyes of the IRS. By default, a single-member LLC is taxed identically to a sole proprietorship. To change this, you must proactively file to be taxed as an S-Corporation.

Small business owners, especially in pass-through organizations, report profits on personal tax filings. This creates a powerful, natural incentive to make strategic purchases before year-end to lower their taxable income and avoid a large personal tax bill.

Instead of a flat salary, employers can structure compensation for remote workers to include a dedicated, non-taxable reimbursement for office expenses. For a $100k employee, this might look like an $85k salary plus a $15k tax-free reimbursement, reducing the employee's tax burden.