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Most S-Corp owners miss this when their spouse changes hours
Most S-Corp owners miss this when their spouse changes hours When Your Spouse Goes Part-Time in the Family business…here’s how to stay on track with your income and retirement plan. One of our business-owner clients reached out with a great question: “My wife is moving from full-time to part-time. We’re cutting her salary from $100K to $60K to avoid bias treatment (SMART!) … but we still need the other $40K as a family, and we don’t want to blow up our retirement plan.” Important: They’re an LLC taxed as an S-Corp So here’s how to think about this and what you can do to maintain family income and retirement funding: Option 1: Increase the owner’s W-2 ✔️ Helps retirement & Social Security ❌ Higher payroll taxes Option 2: Keep the owner salary the same and take owner distributions ✔️ More tax-efficient ❌ Doesn’t help retirement contributions The smarter move? 👉 Blend the two. We bumped the owner’s W-2 just enough to keep retirement on track, took the rest as distributions to reduce payroll taxes, and adjusted the spouse’s 401(k) contribution so her savings stayed on pace, even with fewer hours and less income. These are the kinds of small structural decisions that quietly add up to six figures over time. If you’re a business owner (or married to one), this is worth your attention. As always, be sure to work with your Financial Planner to make sure you are taking the right approach. The opinions expressed herein are for general information only and it is not intended to provide specific advice or recommendations for any individual. Please consult your financial professional, attorney, or tax advisor with regard to your individual situation. #FinancialAdvisor #BusinessOwners #TaxPlanning #WealthManagement #RetirementStrategy #EntrepreneurLife #SmallBusinessTips #SCorp #401k #PayrollTaxes #OwnerDistributions #WealthBuilding #MoneyEducation
Thinking about selling a business? The amount you can bank on might surprise you.
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Thinking about selling a business? The amount you can bank on might surprise you.
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