For many small business owners, tax season is a routine scramble—sorting through receipts, estimating deductions, and hoping to minimize what’s owed. But beneath the surface, subtle missteps can quietly erode profits and keep business owners from maximizing their financial position. The biggest mistake? Staying in the wrong business structure for too long.

Most entrepreneurs start as sole proprietors or form single-member LLCs because it’s easy. No extra paperwork, no corporate formalities—just you and your business. But at a certain revenue level, this simplicity turns into a liability. Sole proprietors and LLC owners who don’t evaluate an S-Corp election could be leaving thousands of dollars on the table in unnecessary taxes. And while online tax software makes it simple to file, it doesn’t replace the strategic planning that keeps more of your money in your pocket. Without a tax expert helping you structure your business the right way, you might not even realize how much you’re overpaying.

Self-employment tax is a silent profit killer.

Unlike W-2 employees who split payroll taxes with their employer, business owners absorb the entire 15.3% self-employment tax on their earnings. That means an LLC owner making $120,000 in profit pays nearly $18,000 in self-employment tax alone.

S-Corps work differently. By structuring income as both salary and distributions, business owners can lower their tax burden significantly. The IRS requires that owners take a “reasonable salary,” but anything beyond that can be distributed as profit—completely avoiding self-employment tax. For business owners bringing in $50K+ in profit, this shift often translates into thousands in tax savings every year.

Most business owners don’t realize how many deductions they miss.

A shocking number of small businesses overpay in taxes simply because they don’t track expenses correctly. Home office costs, mileage, software subscriptions, industry memberships—they all add up, but only if properly documented. Without a system in place, many deductions get left on the table.

One of the hidden benefits of shifting to an S-Corp? It forces better financial discipline. Payroll processing, quarterly tax withholdings, and formal business accounting all become part of the equation, making it harder to let tax savings slip through the cracks. Even if you’re not making the switch this year, now is the time to get your bookkeeping in order.

The S-Corp deadline is almost here. Time to file an extension!

March 15 is the IRS election deadline for S-Corp status in 2025. Miss that date, and you’re locked into your current structure for the rest of the year.

The process is straightforward: if you already have an LLC, filing Form 2553 lets you elect S-Corp treatment without changing your entity. And if you’re behind, some businesses may still be able to file retroactively. But waiting until next year means leaving money on the table for another tax cycle.

If you are unsure whether your business is structured to maximize savings (or if your books are even tax-ready to file), now is the time to take action. 

Get your books tax-ready—and make sure you’re filed properly.

With the tax deadline right around the corner, FlowFi can help you file an extension and use some extra time strategically (Don’t worry, we’re not going to flirt with the October deadline!)—ensuring your books are in order, your deductions are maximized, and your business election is set up correctly.

Book a tax discussion today so we can file an extension, and let’s make sure you’re filed the right way.