Are You Still Operating Under the Structure You Set Up Five Years Ago?
Think back to when you set up your business.
For a lot of the owners we work with, that decision took about twenty minutes. Maybe an attorney handled it as part of something else. Maybe it was a website that asked five questions and produced an LLC. Maybe your brother-in-law had one, so you got one.
It was the right call at the time, or close enough. The problem is that it was made about a business that no longer exists. You've added employees since then. Maybe an owner. Maybe a building. Your profit might be three times what it was. And the paperwork underneath all of that has never once been looked at again.
Structure is a decision you make more than once
People treat entity structure like a birth certificate and issued once, permanent, not really up for discussion. It's closer to an insurance policy. It should get reviewed when the thing it covers changes materially.
And the review isn't only about the entity type. It's about the whole shape of how money moves from the business to you.
The questions worth reopening this fall
Does a sole proprietorship, partnership, LLC, or S corporation actually fit your current profit level and payroll?
How are you paying yourself draws, payroll, some combination and is that method costing you anything?
If you're an S corporation, is your owner compensation defensible and documented?
Is your health insurance being handled the specific way owner coverage has to be handled, or is it just being paid out of the business account?
Do you have more entities than you need, or fewer than you should?
Is real estate sitting inside your operating company where it probably shouldn't be?
Have you started doing business in another state without meaning to?
Any one of these can be worth real money every year, quietly, for as long as it goes unexamined.
About owner compensation
If you run an S corporation, this is the one we'd put at the top of the list.
You're required to pay yourself reasonable compensation for the work you actually do, real wages, run through payroll, with the taxes withheld. Pay yourself too little and you've created an audit issue and a hard conversation later. Pay yourself more than you need to and you've given up the benefit that made the structure worth having.
The right number is specific to you: what you do, how many hours, what someone else would be paid to do it in your market. It should be documented rather than picked. And here's the timing piece that matters right now and a correction has to run through payroll before your last check date of the year. You cannot fix owner compensation in March. There is no payroll left to fix it with.
One Wisconsin question worth asking
Wisconsin allows pass-through businesses and S corporations and partnerships to elect to pay state tax at the entity level rather than having it flow through to the owners' personal returns. For some owners this is worth a meaningful amount of money every year. For others it does nothing at all, or it interacts badly with returns you file in other states.
We're not going to tell you in an article whether it's right for you, because it genuinely depends on your income, your other states, and your personal return. But it is worth asking about by name, because it's the kind of thing that never comes up unless someone brings it up.
Why this is a fall conversation and not a spring one
Structure changes and elections come with deadlines that are tied to the beginning of the year they apply to, not the end of it. Which means a change you want in effect for 2027 is something you decide in the fall of 2026 and put in place around the turn of the year.
If you wait until we're preparing your 2026 return in March, the earliest most of these can help you is 2028. That's a two-year delay on a decision you could make in one meeting.
What changes when the structure fits
In the business, you stop paying for a mismatch every year. You get a clean, defensible way to pay yourself. Your books get simpler, because the way money moves finally matches the way it's supposed to move on paper. If you ever go to sell, or bring in a partner, or apply for real financing, the structure holds up under someone else's inspection.
In your life, it's mostly about the absence of a nagging question. You stop wondering whether you should have done something different years ago and never got around to asking. And the money it saves is money that shows up in your household, not just on a return.
What it takes to get started
Bring your current setup as it actually exists and the entity paperwork, last year's returns for the business and personally, how you've been paying yourself this year, and any other entities or properties in the picture. If you're not sure what you have, that's a legitimate answer and it happens more than you'd guess. We can pull most of it.
Then one working session. If a change makes sense, we handle the filings and the payroll setup. If nothing needs to change, you'll hear that too, and you'll have the answer for good.
Who we are
Business Advisory Services LLC brings two decades of accounting, bookkeeping, payroll, tax preparation, tax resolution, and business advisory work for small businesses, from our offices in Middleton and Eau Claire, serving Wisconsin and the surrounding states. We do a lot of structure reviews this time of year, for exactly the reason above.
Let's look at it before the year turns
608-831-4900, ext. 801. Or call us on our cell phone at 608-347-3010. If your business today doesn't look much like your business when you set it up, that's the whole reason to call.
Next week, to close the series: what has to happen before December 31, and what can wait.
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