The Challenge
Dylan operated two businesses with different tax treatments, which created unnecessary filings and higher prep costs. The event production company booked about $1.5M in revenue with roughly $70K net income, which made cash tracking critical due to deposits, vendor prepayments, and gear rentals. The real estate brokerage earned about $30K net. On top of that, a $145K W-2 complicated marginal rates and SALT limitations. The structure risked messy deductions across entities and offered no coordinated retirement strategy.
Gelt’s Strategic Approach
Unify the operating structure
Consolidate to a single S-corp as the primary operating company, with the event production LLC treated as a disregarded subsidiary. This reduces duplicative filings and clarifies where income, payroll, and deductions live.California PTET election for 2024
Elect and fund California’s pass-through entity tax for S-corps to shift state taxes to the entity level and regain a federal deduction that would otherwise be capped. Calendar the initial $1K payment by the June 17 deadline and plan higher required prepayments in future years.Right-sized compensation and retirement design
Set a reasonable S-corp wage and enable Solo 401(k) contributions from business income. Map Roth conversions for lower-income years so Dylan can move pre-tax money to Roth at favorable rates.Bookkeeping and cash visibility
Stand up QuickBooks with a clean chart of accounts for both lines of business under one umbrella. Implement weekly cash checks, reimbursement workflows, and job-level cost tracking tailored to deposit and vendor-heavy event work.
Results & Implementation
Early wins with quantified impact that totals $25K
- PTET federal deduction benefit: restores deductibility of state taxes tied to S-corp income, worth $7,000 annually at current levels.
- Fewer filings and fees: one S-corp as the hub reduces duplicated returns and advisory time, worth $4,000 per year.
- Payroll optimization via S-corp: reasonable comp plus distributions reduces exposure to self-employment tax on prior Schedule C profits, worth $5,000 per year.
- Retirement tax savings: Solo 401(k) deferrals and employer contributions aligned to cash cycles, worth $9,000 per year.
Estimated annual benefit: $25,000.
90-day plan
- File the California PTET election and fund required payments for 2024.
- Adopt a single-entity QuickBooks environment and migrate historical data.
- Set officer wage targets and payroll cadence for the S-corp.
- Open Solo 401(k) and document a quarterly contribution policy.
Next 6 to 12 months
- Standardize expense substantiation and home office handling within the S-corp to avoid cross-entity overlap.
- Run a Q3 and year-end projection to dial in PTET, payroll, and 401(k) contributions.
- Evaluate Roth conversion windows in any soft-income months.
- Maintain a 13-week rolling cash forecast to manage deposits, vendor terms, and gear rentals.
Conclusion
With one clean S-corp at the center, Dylan cut complexity, restored deductibility on state taxes, and created a retirement engine that flexes with income. The result is a tighter operation, simpler filings, and $25K in annual savings.
Bringing everything under one S-corp finally made the numbers click. I can see cash clearly, my filings are simpler, and I am keeping more of what I earn.
— Dylan, CA
Disclaimer: This case study is based on a real client engagement. Certain names, locations, and identifying details have been changed to protect client confidentiality. The challenges, strategies, and outcomes described reflect actual facts. Show more
This material is provided for informational and educational purposes only. It does not constitute, and should not be relied upon as, tax, legal, or accounting advice. Each individual’s circumstances are unique, and readers should consult their own qualified professional advisors before making any decisions.
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