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S-Corporations
S-Corporation Set-Up, Tax, Planning & Advisory Services
S-corporations offer meaningful tax and ownership advantages to many California medical and healthcare practices, service and related owner - operated businesses - but only when structed and operated correctly under California law.
Natalie C. Papagni, CPA has extensive expertise assisting S-corporation owners / shareholders with new and existing S-corporations understand and comply with S-corporation IRS requirements, efficiently financially manage and control the business, make tax-smart decisions to minimize tax liabilities, file accurate and efficient 1120S and 100S tax returns and optimize the benefits of S-corporation ownership status.
Businesses that Typically Benefit
General Attributes for S-Corp Candidates
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Professional services business
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Closely held or family owned
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1 or more shareholder - owner / operator - employees
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Interest in limited liability protection
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Active owner - employees
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Consistently Profitable
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30k + Net Profit annually
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Interest in pass-through business ownership
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Interest in avoiding double taxation & self-employment tax
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Interest in receiving reasonable compensation on payroll
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Flexible retirement plan strategies
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Interest in taking advantage of special elections not available to Sched C business or corporation
Businesses That Are Not Good S-Corporation Candidates
❌ Low or Inconsistent Profit Businesses
❌ High variable or unpredictable earnings
❌ Early-stage businesses still stabilizing cash flow
❌Low net income
❌Rental real estate (unless part of a larger operating structure)
❌Investment income without active owner participation
❌Businesses where owners do not materially participate
Specialized Expertise
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S-corporation entity election analysis, set-up and formation
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S-corporation tax strategies & planning
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S-corporation federal and state tax returns
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QBI and PTET Planning & Analysis
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Reasonable Compensation
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Retirement-plan Strategies
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K-1 planning
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Optimizing the benefits of S-corporation business ownership
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S-corporation federal and state tax returns
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S-corporation accounting & bookkeeping
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Late filing elections
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and more
Example 1
Physician — Hospital Employment + Locums
S-Corp Solo 401(k) with Profit Sharing + CA PTET
Hospital Employer
Hospital Income Type
Example Hospital Income
Outside Income Type
Potential QBI Deduction
Example 1099 Income
S-Corp Reasonable Salary
S-Corp Distributions
Self-Employment Tax
CA PTET Election
UCSD 403(b)
UCSD 457(b)
UC Pension
Solo 401(k) – Employee Deferral
Solo 401(k) – Employer Profit Sharing
Total S-Corp Retirement Contribution
Estimated Total Annual Benefit
University of California San Diego
W-2 wages
$300,000
1099 locums / moonlighting
TBD
$200,000
$120,000
$80,000
Avoided on S-Corp distributions
~$7,400 California tax credit
Available on hospital income
Available on hospital income
Employer-funded
~$23,500 from S-Corp W-2
~$30,000 (25% of S-Corp W-2 salary)
Up to ~$53,500
~$35,000–$40,000
💡Important for UCSD Physicians:
Participation in UCSD’s 403(b), 457(b), and pension does not limit Solo 401(k) profit-sharing through an S-Corporation. Hospital W-2 income cannot be used for Solo 401(k) contributions — only S-Corp wages qualify.
Example 2
Private Practice Owner
Cash balance + Solo 401 + PTET
SE Tax Optimization
CA PTET Election
Potential QBI deduction
Solo 401(k)
Cash Balance Plan
Auto & Depreciation
Estimated Total Annual Benefit
$100,000 +/- tax savings & deferral
$350,000 distributions
—
TBD
$66,000
$120,000–$200,000+
$18,000–$25,000
S~$26,000 payroll tax savings
~$30,000 CA tax credit
Up to 20% QB Income
Tax-deferred retirement
Large current-year deduction
Accelerated depreciation
💡Note:
* Results vary based on income level, reasonable salary, and plan design.
All strategies require CPA-led coordination and California compliance.
Example 3
Professional Service Provider
S-corp + Solo 401 + Cash Balance + PTET
SE Tax Optimization
Qualified Business Income (QBI)
Home Office (Accountable Plan)
CA PTET Election
Solo 401(k)
S-corp salary
Estimated Total Annual Benefit
$15,000 - $30,000 +/- tax savings & dedection
$45,000 distributions
Up to 20% of QBI
$8,000–$12,000 +/-
—
$25,000–$40,000 +/-
$75,000 +/-
S~$26,000 payroll tax savings
~$30,000 CA tax credit
Tax-deferred retirement
Large current-year deduction
Accelerated depreciation
💡Note:
* Results vary based on income level, reasonable salary, and plan design.
All strategies require CPA-led coordination and California compliance.
Let's Talk.
Setting up and operating a S-corporation intelligently may be easier than you think.
And, the benefits of owning and operating an S-corporation may be significantly more attractive than you may have anticipated.
When you are ready to explore the let's get your conversation started.
San Diego CPA Tax Advisor for S-corporations | La Jolla CPA Tax Advisor for S-corporations
S-corporation Set-up and Formation | S-corporation Tax Strategies | S-corporation Tax Preparation
S-corporation Late Filing Election | S-corporation Reasonable Salary | S-corporation Shareholder Benefits
S-corporation QBI and PTET Tax Planning | S-corporation Retirement Strategies
S-Corporation Tax CPA near Me