Case Study: An Agency Owner's S-Corp & Accountable Plan Stack

The situation

Priya ran a growing marketing agency as a single-member LLC. Every dollar of profit flowed to her personal return and got hit with self-employment tax on top of income tax — on $310,000 of net income, that self-employment tax alone was a meaningful five-figure bill before any income tax was even calculated. She'd heard "you should probably S-corp" from other agency owners for two years but never actually ran the numbers or made the election.

What we did

• Elected S-corp status and set a reasonable salary benchmarked to comparable agency-director compensation, letting the remaining profit distribute without self-employment tax
• Set up an accountable plan to reimburse her home office and a portion of her cell phone and internet tax-free instead of as taxable wages
• Added her two kids to payroll for real, logged work — social media content review and office filing — under the hiring your children strategy
• Elected her state's PTET election at the entity level to get around the $10,000 SALT deduction cap on her state income tax

The numbers

The result

None of these moves individually was dramatic, and that's the point — this wasn't one clever trick, it was four ordinary strategies stacked correctly and maintained with real documentation. The S-corp election alone paid for the additional payroll administration and accounting cost several times over. The bigger shift was procedural: reasonable salary reviewed annually, accountable plan reimbursements processed monthly instead of guessed at tax time, and the kids' timesheets logged as they went rather than reconstructed in April.