The $35,000 Mistake: Why High-Income Entrepreneurs Lose Big Without Tax Planning

Johnathan Wood
Oct 3
2 min read

When your business crosses into the $500k–$5M revenue range, every dollar matters.

Yet, too many successful entrepreneurs are unknowingly handing the IRS a $35,000 tip each year - not because they’re doing something wrong, but because they’re not doing enough.

That’s the hidden cost of treating tax prep as if it were tax planning.

The Truth About Tax Prep

Tax preparation is important. You need compliance, accurate returns, and on-time filing. But here’s the problem: tax prep is backward-looking.

It focuses on what already happened, not what could have been done to keep more money in your pocket.

Reactive: Only look at the past 12 months.
Deadline-driven: All energy revolves around April 15th.
Basic deductions only: Home office, mileage, office supplies.
No income structuring: Your salary, distributions, and investments aren’t optimized.

In other words, tax prep reports your results - it doesn’t shape them.

A Real Example: Dana’s $40,000 Wake-Up Call

Meet Dana, an S-Corp owner projecting $800,000+ in annual income.

Before working with us, she was on track to pay between $75,000–$91,000 to the IRS and State of Maryland this year. Her CPA kept her compliant, but no one was asking:

“How can we cut this down?”

When she came to TAX PREMIER, we built a proactive plan:

Rebalanced her salary-to-distribution split
Implemented a Solo 401(k) with six-figure contribution potential
Leveraged strategic deductions through her business

Result? Over $40,000 in tax savings - money she’s now using to expand her team and scale her business.

That’s the difference between tax prep and tax strategy.

The $35,000 Mistake in Your Business

Here’s what most high-income entrepreneurs get wrong:

They assume compliance = savings. Wrong. Compliance just keeps the IRS happy.
They don’t revisit their entity structure. LLC vs. S-Corp vs. Holding Co. could mean a $20k–$50k swing.
They miss advanced strategies. The Augusta Rule, cost segregation, kids on payroll, and other tools are often ignored.
They only talk about taxes in April. True wealth builders plan every quarter.

Every year this continues, the $35,000 mistake compounds - and that’s money you’ll never get back.

Quick Comparison: Prep vs. Strategy

Feature	Tax Prep	Tax Strategy
Mindset	Reactive	Proactive
Timing	Once a year	Year-round
Goal	IRS Compliance	Wealth Optimization
Deduction Scope	Basic	Advanced
Savings	Minimal	$30k–$75k+ possible