TheTaxGuy

If you’re a physician, dentist, or consultant running an S-Corp in North Carolina, you might be unknowingly losing thousands of dollars each year.

Many high-income professionals set up S-Corps to reduce self-employment taxes—but without the right strategy, your S-Corp can quietly bleed cash through poor compensation planning, unclaimed deductions, and missed retirement contributions.

The Most Common S-Corp Mistakes We See in NC

1. Paying the wrong W-2 salary.
Most business owners either guess or overpay. The IRS requires “reasonable compensation,” and getting this wrong can either trigger an audit or waste money on unnecessary payroll taxes.


2. Ignoring the power of a Solo 401(k).
Solo 401(k)s are one of the most powerful, underutilized tools for S-Corp owners. In 2025, you can contribute up to $70,000 (or $77,500 if age 50 or older) through combined employee deferrals and employer contributions.


3. Letting profits sit in the business.
Excess profits can be deployed strategically through retirement accounts, tax-free benefits, accountable plans, and defined benefit structures.

🏥 Real-World Case: Dr. Shaw in Greensboro

Dr. Shaw, a general dentist with a solo practice, was paying herself $170,000 in W-2 wages and taking only $30,000 in distributions. She had no retirement plan in place.

After restructuring:

Her salary dropped to $110,000, reducing payroll tax exposure

She took $90,000 in distributions, free of payroll tax

She established a Solo 401(k) and contributed $66,500 tax-deferred in 2025


Total estimated tax savings: Over $20,000—in just one year.💸 Missed Deductions That Compound Over Time

Home office & mileage reimbursements via Accountable Plans

Hiring your child: pay up to $14,000 tax-free in 2025

Health reimbursement arrangements (HRAs) to deduct family medical expenses

Defined benefit or cash balance plan contributions for even larger deductions in high-income years


💡 The Fix: Treat Your S-Corp Like a Real Business

Your S-Corp isn’t just a tax structure—it’s your most powerful financial tool. But it requires active planning and regular reviews. North Carolina’s S-Corp owners, especially those in medicine and dentistry, are leaving five figures on the table annually by neglecting these strategies.


🔎 Bottom Line for North Carolina Professionals

If your S-Corp is:

Earning more than $200K per year

Not actively funding a Solo 401(k) or retirement plan

Paying W-2 wages without strategic review

Using a CPA that doesn’t specialize in health care practices…


You’re probably overpaying in taxes—every single year.


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Let’s fix that.
At J Scott & Associates, we specialize in helping North Carolina’s top professionals turn their S-Corps into tax-saving machines. Let us show you how much you’re leaving behind.