Self-employed entrepreneurs often leave money on the table for reasons that have little to do with how hard they work and everything to do with structure, timing, and discipline.
In a conversation with Charlie Dombek, CEO of Axium Wealth, three themes keep surfacing: choose the right entity, claim what you are legitimately allowed to claim, and plan before December 31, not after. His guidance reads less like theory and more like a practical operating system for keeping more of what you earn.
The Quickest Wins Sit in Plain Sight
Dombek starts with a simple question: Are you still filing as a sole proprietor out of habit? Many are, and that choice can be costly. Sole proprietors pay self-employment tax of 15.3% on all business profits. Electing S-corporation status allows owners to pay a reasonable salary, which is subject to payroll tax, then take additional profit as distributions, which are not. For anyone consistently earning above roughly sixty to eighty thousand dollars in profit, the savings can reach five figures a year.
The next leak is missed deductions. Home office, vehicle use, phone and internet, education, and travel tied to client work are everyday business costs. Too often, entrepreneurs either fear audits or simply do not track expenses well, so those dollars never hit the books. In 2024, the standard mileage rate sits at sixty-seven cents per mile, and legitimate home office expenses can include a portion of rent or mortgage, utilities, and insurance. Documentation and consistent bookkeeping turn these from “nice to have” into dependable tax relief.
A third lever is retirement. Self-employed plans such as a SEP IRA or Solo 401(k) allow large pre-tax contributions that directly lower taxable income. For 2024, the cap on employer contributions reaches sixty-nine thousand dollars. Skipping these plans means paying full income tax on profits that could be sheltered while building long-term wealth.
The Biggest Mistake Is Waiting
Dombek’s bluntest observation is also the most common: entrepreneurs treat taxes as an April problem. Without proactive planning, owners miss deductions, fail to set aside cash, incur penalties, and realize too late that entity choices or retirement moves should have been made earlier.
He points to several recurring pitfalls. First, not reserving cash for taxes. No employer is withholding for you, so a standing habit of setting aside 25 to 35% of net income and making quarterly estimated payments keeps you out of trouble. Second, mixing personal and business spending. One clean business account and card, plus a scheduled transfer for personal spending, protects deductions and audit readiness. Third, weak bookkeeping. Real numbers drive real planning, which is why monthly reconciliations and up-to-date categorization matter. Finally, consulting a professional only after the year closes. A midyear meeting can flag salary adjustments for S-corp owners, fine-tune retirement contributions, surface health insurance or HSA opportunities, and decide whether to accelerate expenses or defer income.
Entrepreneurs should lean into structured tax planning once net self-employment income consistently tops eighty to one hundred thousand dollars, or when marginal tax rates reach 32% and above.
Charlie Dombek
When to Get Sophisticated
There is no single threshold, Dombek says, but there is a practical range. Entrepreneurs should lean into structured tax planning once net self-employment income consistently tops eighty to one hundred thousand dollars, or when marginal tax rates reach 32% and above. That bracket begins at about one hundred ninety-seven thousand dollars of taxable income for single filers and about three hundred ninety-five thousand dollars for married couples filing jointly. At that level, self-employment taxes bite, retirement contributions become meaningful, and the payoff from electing S-corp status or refining ownership structure outweighs the added complexity.
He outlines a simple spectrum. Up to fifty thousand dollars of net income, keep it simple, track expenses, and make quarterly payments. From fifty to one hundred thousand, get organized with software and scheduled planning calls. From one hundred to two hundred fifty thousand, optimize with entity elections, retirement plans, and health arrangements. Above two hundred fifty thousand, layer in strategies such as income shifting, defined benefit plans, real estate, and charitable tools.
A year-round cadence that compounds
Dombek’s operating rhythm is straightforward. Separate finances and keep books current each month. Calculate and pay estimates on time. Track deductions in real time with mileage apps and digital receipts. Hold a midyear planning session to adjust salary, contributions, and timing moves. Fund tax-advantaged accounts like Solo 401(k)s, SEP IRAs, HSAs, and even 529s where appropriate. Revisit entity structure annually, especially once profits cross the eighty to one hundred thousand mark. Monitor profit, cash flow, and projected liability quarterly. Then run a year-end sprint in November and December to execute purchases, contributions, charitable gifts, and any deferrals before the window closes.
The result is not just a smaller April bill. It is a more professional company, with better cash flow, and a habit system that compounds year after year.
About Axium Wealth
Axium Wealth provides advanced wealth management and tax mitigation strategies to high-net-worth individuals, family offices, and business owners nationwide. Founded by Charlie Dombek, CPA, MBA, Axium integrates tax planning, real estate, and alternative investments to deliver comprehensive solutions for preserving and growing wealth. Learn more at axiumwealth.com.
This article was originally published on gritdaily.com.
Story by Jordan French
This industry announcement article is for informational and educational purposes only and does not constitute financial or investment advice.
