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4275 Executive Square Suite 200
La Jolla, CA 92037
(858) 754-8277
CPA & Tax Strategist for S-corporations & Shareholders
La Jolla, Greater San Diego & California
Serving S-corporations and shareholders in La Jolla, greater San Diego and throughout California, Natalie C. Papagni, CPA - Tax, Planning & Advisory Services assists clients evaluate entity-selection options, understand the unique benefits and pitfalls of operating an S-corporation, design and quarterly refine multi-year shareholder and S-corporation financial and tax projections factoring in advanced tax planning opportunities, prepare shareholder and S-corporation tax returns, and more.
Natalie C. Papagni, CPA provides her clients direct access, responsiveness and on-demand guidance throughout the year to help shareholders make smart decisions to optimize business financial performance, stay compliant with S-corporation laws, minimize federal and state tax liabilities and optimize the benefits of S-corporation ownership.
Natalie C. Papagni, CPA prepares S-corporation and personal tax projections - updated and refined quarterly - factoring in agreed up tax planning opportunities, such as the California PTET, to assist them make smart, intentional and timely decisions to minimize tax liabilities and optimize the benefits of business ownership.
Working with us, you will work closely with Natalie C. Papagni, CPA to assist architect a strategy and a plan to target and achieve the personal and business financial future you envision - in compliance with federal and state tax laws.
S-Corporation & Shareholder
Tax Planning, Compliance & Advisory Services
Tax Strategy & Planning
Reasonable compensation guidance
Distribution-versus-wage optimization
Shareholder basis tracking
Solo 401(k), profit sharing, and cash balance layering
California PTET election and planning
QBI §199A optimization
Accountable plans, health insurance, and fringe benefits
Bonus depreciation and §179 expensing
Multi-entity and holding-company structuring
Current-year tax law planning
Quarterly S-corp, K-1, and personal projections
Tax Compliance
S-corporation election (Form 2553), including late elections
Form 1120-S, CA 100S, and multi-state preparation
Shareholder basis and AAA tracking
Schedule M-2 and AAA reconciliation
Officer W-2 and Schedule K-1 coordination
Payroll setup and quarterly filing guidance
Shareholder health insurance and accountable plan reporting
Accounting reconstruction and cleanup
Amended and corrective returns
First-year compliance documentation
If you are contemplating forming an S-Corporation, and have questions, we encourage you to reach out and get our conversation started.
Will I benefit from an S-corporation election? What are common shareholder benefits?
What are the downsides of operating as an S-corporation?
Why do I have to take a reasonable salary?
Why is tracking basis important, and how does basis govern cash I can withdrawal from the business?
Can I add my vehicle to the business financial statements?
When can I buy a vehicle and write off the vehicle in full the first year?
Why are some shareholders not able to deduct benefits paid to a > 2% shareholder? How can this be avoided?
How do I elect the California PTET tax?
How do I know if optimizing QBI is better than electing the CA PTET?
If you are a shareholder with an existing S-corporation, we encourage you to reach out and get our conversation started.
My prior preparer made errors on my s-corporation & personal returns. Is Natalie C. Papagni, CPA able to amend the returns?
I earn revenue from both products and services — should those sit in one entity or be separated?
Should I set up a holding company, and what would it actually accomplish for me?
Does a holding-company or multi-entity structure lower my taxes, protect my assets, or both — and is it worth the added complexity and cost?
I've built up real estate — should it live inside my S-corporation or in a separate LLC, and why does that choice matter so much?
Should a second business line be its own entity, or a division of the one I have?
If I own more than one entity, how do management fees, intercompany charges, and cost-sharing need to be handled to hold up under scrutiny?
Would an S-corporation, LLC, or a combination serve my structure better as I grow?
Is my salary still reasonable now that my income has grown, and how does that interact with my QBI deduction?
Am I capturing every retirement deduction available?
Should the California PTET election be part of my plan every year, and how do I the PTET across multiple entities?
Now that profits are accumulating, what's the most tax-efficient way to move cash out — to me, or into another entity I own?
Should my spouse or family members be on payroll or own shares, and does it genuinely help?
Am I coordinating my business and personal returns to minimize my total tax liabilities?
If you are contemplating forming an S-corporation or are a shareholder with an existing S-corporation, schedule a complimentary consultation with Natalie C. Papagni, CPA - Tax, Planning & Advisory Services today.
Frequently Asked Questions (FAQs)
How much can an S-corporation save in California?
For a business with $100,000 + net income, many owner-entrepreneurs find payroll tax savings and additional benefits of an s-corporation election attractive. Layered retirement plans, the California PTET election, the QBI deduction, home office, business vehicle expense deductions, depreciation strategies and other opportunities exist to help minimize taxes, and optimize the benefits of business ownership.
When does an S-corporation election make sense vs. staying a sole proprietor or LLC?
For a business netting around $100,000 + in net income, many owner-entrepreneurs find the payroll tax savings of an S-corporation election attractive — and the election is often just the beginning. Unlike sole proprietorships, an S-corporation an take advantage of the California PTET election. In addition, S-corporation shareholders with adequate shareholder basis are able to take distributions - free of payroll tax. While an S-corporation is not right for everyone, may find an S-corporation allows them to optimize the benefits of business ownership.
Can a physician use an S-corporation for locums or private practice income in California?
Yes — at the right income level. California physicians with consistent 1099 locums or private practice income above $100,000 +/- often find an S-corporation election attractive: payroll tax savings on distributions, a Solo 401(k) funded through W-2 compensation on top of any hospital 403(b)/457(b) plans, and the California PTET election. Below $100,000, many physicians find the state's franchise tax, payroll, and compliance costs and administrative burdens not worth the savings. As such, we find running a comparative analysis essential prior to recommending the election. * Note that California requires licensed physicians to operate through a professional medical corporation, which then makes the S election.
What is a reasonable salary for an S-corporation owner in California?
Reasonable compensation generally reflects market-based wages for services actually performed by shareholder-employees. The IRS closely examines situations where shareholder distributions substantially exceed W-2 compensation, particularly in highly profitable businesses. Factors considered may include industry standards, duties performed, geographic region, hours worked, training, collections generated, and comparable compensation data. Proper analysis and documentation help reduce audit exposure.
What is an accountable plan and and why does every S-corporation need one?
An accountable plan is an IRS-sanctioned reimbursement arrangement that allows a business to reimburse shareholder-employees for qualifying business expenses - home office, business mileage, internet and mobile phone use, travel, and more - without treating the reimbursements as taxable wages. Without a properly structured plan, those same reimbursements are W-2 income.
How do I plan a tax-efficient exit from my S corporation?
Exit planning starts years ahead: cleaning up basis records, evaluating asset versus stock sale structures, considering personal goodwill allocations, timing the transaction around income and PTET elections, and — in California — planning for the state tax bite on the gain. Whether the exit is a third-party sale, associate buy-in, or wind-down, early structuring drives the after-tax result.
How do I plan a tax-efficient exit from my S corporation?
Stock and debt basis determine whether S-corporation losses are deductible and whether distributions are tax-free. Distributions in excess of basis are taxed as capital gain, and losses beyond basis are suspended. The IRS now requires Form 7203 whenever shareholders claim losses, receive distributions, or dispose of stock. Accurate, year-by-year basis schedules are essential — reconstructing basis years later is expensive and often imprecise.
How can S-corporation owners maximize the QBI deduction?
Distributions should be coordinated with reasonable compensation, shareholder basis, and cash flow — not taken ad hoc. Best practice is a documented salary supported by comp data, distributions taken only after payroll obligations are met, and a year-end review confirming distributions don't exceed basis. Proportionality matters too: disproportionate distributions among shareholders can jeopardize the S election.
How can S-corporation owners maximize the QBI deduction?
The Section 199A qualified business income deduction allows up to a 20% deduction on pass-through income — but physicians and other specified service businesses face a complete phase-out at higher taxable income levels. For SSTB owners, the planning objective is managing taxable income beneath the thresholds: retirement plan contributions and PTET payments are the primary levers. Salary calibration adds a second dimension — owner wages reduce qualified business income but also support the W-2 wage limitation that applies at higher incomes. The right balance is individualized, and it changes as income grows.
Does an S-corporation owe taxes in more than one state?
If the corporation has nexus — employees, property, or revenue exceeding a state's economic nexus threshold — it may owe tax and apportion income across states. Owners may then face nonresident filing obligations, composite return options, and PTET regimes that vary state by state. Multi-state S-corporations need coordinated entity and individual planning to avoid double taxation and capture resident-state credits for taxes paid elsewhere.
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