There is a moment in almost every new client engagement at AE Tax Advisors where the business owner sits back, goes quiet, and says some version of the same thing: “Why didn’t my CPA ever tell me about this?” The firm hears it weekly. The mistakes are not exotic or aggressive. They are well-established, fully legal strategies that have been available in the tax code for years, sometimes decades, that the business owner’s previous accountant either did not know about or did not take the time to implement. AE Tax Advisors, a boutique Montana-based firm specializing in advanced tax planning for high-income business owners, was built to close exactly this gap.
What makes these oversights so costly is that they compound. A missed S-Corp election does not just cost the owner $30,000 in one year. It costs them $30,000 every year for as long as the structure remains unchanged. A property depreciating on a 39-year schedule instead of an accelerated schedule is generating a fraction of the deductions it should produce, and that fraction stays small for decades. By the time the business owner learns what they have been missing, the cumulative cost can reach six or even seven figures.
About AE Tax Advisors
AE Tax Advisors works exclusively with business owners earning $500,000 or more annually. The firm’s practice is built around a simple observation: the difference between what most CPAs know and what a specialist firm can deliver is routinely measured in six figures of annual tax savings. Every engagement begins with a comprehensive review of the client’s prior returns, entity structure, and financial picture, and that review almost always uncovers missed opportunities that dwarf the cost of the engagement.
The firm does not compete with general practice CPAs on compliance work. It focuses entirely on the planning layer that sits above compliance, the strategic decisions about entity structure, retirement vehicles, depreciation methodology, and income classification that determine how much of the business owner’s earnings are retained versus surrendered to tax authorities.
The Self-Employment Tax Drain That No One Mentions
The most common and most expensive oversight AE Tax Advisors encounters is the business owner who has never made an S-Corp election. An owner earning $400,000 or more through a sole proprietorship or single-member LLC is paying self-employment tax, the combined 15.3% Social Security and Medicare tax, on the entire net profit. On $400,000 of income, that translates to roughly $30,000 to $40,000 annually in self-employment tax alone.
An S-Corp election allows the owner to pay themselves a reasonable salary subject to payroll taxes and take the remaining profit as a distribution not subject to self-employment tax. For owners in this income range, the annual reduction is typically $20,000 to $35,000. AE Tax Advisors has worked with business owners who operated without this election for five, ten, even fifteen years. The missed savings over that period can exceed $200,000, money that cannot be recovered retroactively.
The IRS does allow late S-Corp elections under Revenue Procedure 2013-30, and the firm files these routinely, but the election only produces savings going forward. What frustrates many new clients is not the complexity of the strategy but its simplicity. The S-Corp election is one of the most widely documented tax planning tools in existence, and their prior CPA never once raised it as an option.
Real Estate Depreciation Left on the Table
Business owners who invest in real estate are almost universally depreciating those properties on the standard 27.5-year or 39-year schedule. Their CPA set it up on the first return and never revisited it. A cost segregation study, conducted by a licensed engineer, identifies building components that can be reclassified into 5-year, 7-year, or 15-year depreciation categories. Under the One Big Beautiful Bill Act, 100% bonus depreciation has been permanently reinstated for qualified property, meaning every dollar reclassified can be deducted in full in the year the property is placed in service.
For a $600,000 property, a cost segregation study typically reclassifies 25% to 40% of the building’s value, producing $150,000 to $240,000 in first-year deductions. At top tax rates, that is $55,000 to $89,000 in immediate savings from a single property. For business owners who already own properties, the missed depreciation from prior years can be captured in a single catch-up deduction through IRS Form 3115, without amending prior returns. The cost of a quality study is typically $3,000 to $8,000. The return on that investment routinely exceeds 10 to 1.
AE Tax Advisors sees this mistake in virtually every new client with real estate holdings. The firm has worked with clients who own five, ten, or more properties, all depreciating on the standard schedule, and the aggregate missed deductions reach into the hundreds of thousands. The Form 3115 catch-up allows all of that missed depreciation to be recovered in a single tax year, producing a one-time deduction that can dramatically reduce the client’s tax bill.
Retirement Plans That Shelter a Fraction of What They Could
Most CPAs recommend a SEP-IRA or Solo 401(k) for retirement savings. These are solid vehicles, but their contribution limits cap at approximately $70,000 per year. For a business owner earning $500,000 or more, that represents a fraction of the income they would like to shelter. A defined benefit plan, or a combined defined benefit and 401(k) structure, allows contributions exceeding $300,000 per year depending on the owner’s age and income. Every dollar contributed is tax-deductible. At top combined rates, a $300,000 contribution produces $120,000 to $150,000 in immediate tax savings.
AE Tax Advisors finds that the vast majority of its new clients have never been presented with a defined benefit plan option. Their CPA set up a SEP-IRA years ago and never evaluated whether a more powerful structure was appropriate. For owners in their late 40s, 50s, and 60s, the actuarial calculations allow the largest contributions, and the missed savings can be staggering. A business owner who has been contributing $60,000 per year to a SEP-IRA for a decade could have been contributing $250,000 per year to a defined benefit plan. The difference in cumulative tax savings over that period can exceed $500,000.
Tax-Free Income and State Tax Workarounds Hiding in Plain Sight
The Augusta Rule under IRC Section 280A(g) allows a business owner to rent their personal residence to their own business for up to 14 days per year and exclude the rental income entirely from their personal tax return. The business deducts the payment, and the owner receives the income tax-free. For a home that could command $3,000 to $5,000 per day as a meeting or event venue, the strategy produces $42,000 to $70,000 in annual tax-free income. AE Tax Advisors estimates that fewer than 5% of eligible business owners are using this strategy.
The pass-through entity tax election in high-tax states represents another widely overlooked strategy. Business owners in states like California, New York, New Jersey, and Illinois who operate through S-Corps or partnerships can elect to pay state income tax at the entity level, converting individually capped SALT deductions into fully deductible entity-level business expenses. The OBBBA raised the SALT cap to $40,000 but included income-based phasedowns that reduce the benefit for high earners. The PTE election bypasses these limitations entirely. For an S-Corp owner paying $80,000 in state income tax, the PTE election can produce $15,000 to $25,000 in additional federal tax savings annually.
What This Means for Business Owners Paying More Than They Should
The strategies described above are not speculative or aggressive. They are foundational, the kind of planning that should be standard practice for any business owner earning $500,000 or more. AE Tax Advisors exists because, for most business owners, it is not. The firm’s initial review consistently uncovers enough missed savings to pay for multiple years of advisory fees, and the ongoing planning ensures those savings compound year after year.
The gap between a compliance-focused CPA and a planning-focused advisory firm is not a matter of skill or intent. It is a matter of scope. Most CPAs are trained to prepare accurate returns. They are not trained to build multi-year tax architectures that minimize the total tax burden across entity structures, real estate holdings, retirement vehicles, and state tax elections. AE Tax Advisors fills that gap for business owners who have outgrown what their general practice CPA can deliver.
To learn more about AE Tax Advisors, visit: https://www.aetaxadvisors.com
