The Wealth Planning Podcast with Brister Law · 2025-12-19 · 16 min
Key moments - from our scoring
Substance score
45 / 100
Five dimensions, 20 points each
This episode dismantles the myth that tax planning is about receipt-gathering and instead focuses on the two largest tax levers for business owners: entity choice and payroll strategy. Brister walks through the specific profit thresholds (roughly $50,000) where S corporation election becomes worthwhile, then dives into the salary versus distribution split - a critical decision where every $10,000 shifted from salary to profit distribution saves approximately $1,500 in self-employment taxes. He emphasizes that reasonable compensation documentation matters more than fear-based conservatism from CPAs, and that year-end payroll tuning is essential before December 31st closes the window. The episode covers practical tactics including board meeting strategy with written minutes (which unlocks the Augusta Rule - renting your home to your business for up to 14 days tax-free), cleaning up dormant entities that drain state fees, and for high-income earners in states with SALT workarounds, moving deductions from capped personal returns to the entity level where they can be fully deductible. Brister positions himself as a tax attorney offering discovery calls through Brister Law.
Once net profit consistently exceeds approximately $50,000, S corporation taxation becomes strategically worthwhile. Below $30,000 - $40,000 in profit, the complexity may not justify the tax savings.
You cannot set a minimal salary; the IRS requires reasonable compensation based on what you'd pay someone else to do your job, industry comparables, and how much the business depends on you. Basing salary decisions on fear rather than defensible documentation results in overpaying taxes.
The IRS allows late S corporation elections in certain circumstances and can make them effective for the beginning of the year if facts support it and proper procedures are followed, but payroll must still align - you cannot retroactively convert year-end distributions into payroll that was never run.
You can rent your personal residence to your business for up to 14 days per year with no personal income tax on the rental, while your business deducts ordinary and necessary expenses including rent. You must have real meetings with written agendas, minutes, documented attendees, fair market rent, and the meetings must actually occur.
The SALT workaround allows S corporations in certain states to pay state taxes at the entity level and claim full federal deductions, moving the deduction from your capped personal return to the entity return where it can sometimes be fully deductible; it applies primarily to high-income earners in states that have enacted this election.
Our reviewer’s read on each dimension, with quotes from the episode.
The episode covers substantive tax and entity strategies with concrete rules (e.g., the $50k profit threshold for S Corps, the 15.3% self-employment tax rate, the $1,500 tax savings per $10k shifted to distributions). However, much of the content relies on general frameworks without deep operational detail, and significant portions are devoted to promotional messaging and recaps that dilute substance.
Roughly every 10,000 that you keep as profit instead of salary saves you about 1,500 in taxes.
If your net profit after expenses is under 30,000 to 40,000 in S Corp might not be the move that you need to do to actually move the needle to justify that complexity. But once you're consistently over 50,000 in profit, that's when it's time to take a serious look at an S Corp.
The core strategies - S Corp taxation, reasonable salary benchmarking, the Augusta Rule, and SALT workarounds - are well-established tax planning tactics taught in standard CPA courses and tax planning literature. While competently explained, they lack fresh angles, counterintuitive claims, or first-principles questioning. The framing of the Augusta Rule by reference to the golf tournament is narrative color but not novel intellectual content.
There's a section in the tax code that says if you rent out your personal residence for 14 days or less per year, you do not have to pay taxes on that rental income on your personal tax return.
The IRS requires reasonable compensation for the work that you're doing.
This is a solo host episode with no guest. Anthony Brister, the host, is identified as a tax attorney and wealth strategist, but there is no second operator or practitioner brought on to discuss real-world implementation challenges, case studies, or contrasting perspectives that would elevate the conversation.
I'm your host, Anthony Brister, tax attorney and wealth strategist.
The episode provides some concrete numbers (15.3% self-employment tax, $50k profit threshold, $1,500 per $10k shifted, 14-day rental rule limit) and references to tax code sections, but lacks named examples of businesses, real client scenarios, specific tax outcomes, or dollar amounts of actual tax savings achieved. The Augusta Rule explanation is concrete but generic; no case study or specific application is detailed.
roughly 15.3%. In an S corporation, you split your income into two pieces.
if your net profit after expenses is under 30,000 to 40,000 in S Corp might not be the move
The host asks rhetorical questions and frames some objections (e.g., 'Can I go back and make my LLC an S Corp for this year?'), but there is no actual conversation partner, no pushback, and no genuine follow-ups that explore contradictions or limitations. The episode reads as a monologue with staged Q&A rather than dynamic dialogue. Significant portions devolve into promotional copy and calls-to-action rather than substantive probing.
Another question that I get a lot Anthony, Can I go back and make my LLC an S Corp for this year?
You might be thinking, Anthony, I'm not a big corporation. It's just me and my spouse. And that's the point.
Computed from the transcript - who did the talking, and the words that came up most.
This video is for business owners, solopreneurs, and LLC members who want to understand why their current entity structure may be costing them thousands in unnecessary taxes and how to optimize their payroll to keep more profit in their pockets. The IRS does not treat all business income the same way. Inside the tax code are specific provisions regarding S Corporations that allow business owners to split their income between salary and distributions, legally avoiding a significant portion of self-employment taxes. Most taxpayers never hear about the nuances of "reasonable compensation" or the "Augusta Rule" because they require proactive planning, documentation, and a strategic understanding of how entity choices affect your bottom line. In this video, we break down how S Corporations are treated differently under the tax code and walk through advanced strategies business owners are using to save five figures in taxable income while staying compliant with IRS rules. What You’ll Learn Why entity choice is a massive tax lever: Discover how switching from a sole prop to an S Corp can drastically reduce your tax liability.
Transcribed and scored by The B2B Podcast Index.
Speaker A: Welcome back to the Wealth Planning Podcast with Brister Law. I'm your host, Anthony Brister, tax attorney and wealth strategist. And today we're going to be talking about one of the least sexy but most profitable topics in tax planning. How your business entity and your payroll choices either save you thousands or, uh, quietly bleed you dry every single year. We're talking about when you actually need an S corporation, how to avoid overpaying yourself on payroll, the board meeting strategy, the Augusta rule, and cleaning up dead entities. And then also, you're going to want to make sure to stick around for bonus high earners. Salt workaround. This one's for you, especially if you're in a high income state tax. If you're a business owner making more than 50,000 in profit and you're still a sole prop, or you have an S corp that never really was explained to you, this one episode could easily be worth five figures over the next few years. Let's jump right in. All right. So why does entity choice and payroll matter so much? Most business owners think tax planning is about what receipts they saved, what their bookkeeper categorized, or, uh, whether their CPA is good or not so good. Those things matter. But here's the real truth. The biggest levers in your tax life as a business owner are how your business is taxed and how you pay yourself. If you get entity choice and payroll wrong, you overpay in self employment tax, you miss out on, um, legal deductions, and you increase your audit risk without even realizing it. If you get them right, you keep more profit in your pocket, you look better on paper for lenders and investors, and you build a structure that supports real wealth planning and generation. So let's start with a question I get every single week, Anthony. When do I actually need an S Corp? Well, before we answer that, we have to start at the basics. An LLC by itself is a legal wrapper. It's there for asset protection, not tax strategy. An LLC can actually be taxed four different ways. It can be taxed as a sole proprietorship, disregarded entity, a partnership, an S corporation, and even a C corporation. Most of the M time, you're going to stay away from the C Corps. And unless it's some rare cases. So the question isn't just, do I need an llc? It's how should my business be taxed from where I am right now and where I'm going? For a lot of people, this is the basic rule of thumb that I like. If your net profit after expenses is under 30,000 to 40,000 in S Corp might not be the move that you need to do to actually move the needle to justify that complexity. But once you're consistently over 50,000 in profit, that's when it's time to take a serious look at an S Corp. Why? Because as a sole prop or single member LLC taxed as a disregarded entity, all profit is subject to self employment tax. That's Social Security, Medicare tax, roughly 15.3%. In an S corporation, you split your income into two pieces. A salary which is subject to that self employment tax and a distribution which is not subject to the extra self employment layer. The the magic and the danger is in how you split it. So let's talk about your salary versus a distribution before we start. Please don't let your CPA pick your salary out of fear. Let me give you a simple mental model that I want you to remember this. Roughly every 10,000 that you keep as profit instead of salary saves you about 1,500 in taxes. Now we must be very clear. You cannot set your salary at ah a $5 and call it a day. The IRS requires reasonable compensation for the work that you're doing. And reasonable depends on many things. Like what would you pay someone else to do what you do? How much the company succeeds depends on you versus other people or systems. What are comparable salaries in your industry and region? What I see all the time is a business owner with 150,000 net profit and their CPA sets their salary at AH 120,000 just to be safe and they end up paying 5 to 10,000 more in taxes than they actually needed to most of the time. That salary number was picked because the accountant is scared of the phrase it audited. This fear based planning is still planning. It just favors the IRS and paying more in taxes. What we want is a documented defendable salary that reflects reality and it maximizes the legal advantage of the S Corp structure. Here's where year end becomes critical. If you already have an S corp, ask yourself how much salary have I paid myself this year so far? What is left in the business after that? Salary numbers look intentional or are they just random? Your last chance to adjust the salary. If you've underpaid and you need a true up, you avoid a last minute oh no, I didn't run any payroll situation you want to optimize how much shows up as W2 versus the distributions 31st or once December 31st passes. Your W2 is what it is. Payroll filings are what they are and there's very little that we can do to change that picture. So if you're listening to this in the fourth quarter, this is your nudge to get your advisor and tune up your payroll for this year. And if your advisor can't walk you through why they picked your salary level, in plain English, that's your sign. Another question that I get a lot Anthony, Can I go back and make my LLC an S Corp for this year? And the answer is it depends. The IRS allows late elections in certain circumstances and we can often make the S Corp election effective for the beginning of the year if the facts support it and we follow the right procedures. And this is important. Even if the election is effective for the whole year, payroll still has to line up. We can't magically make year end distributions look like payroll that was never ran. That's why I tell people, don't wait until tax season to talk about S Corps. You talk about S Corps and your salary when you're having your year end planning conversation and throughout the year, not after the year ends. Lets shift gears to something most small business owners skip entirely. Board and advisory meetings. You might be thinking, Anthony, I'm not a big corporation. It's just me and my spouse. And that's the point. And that's why this is such an easy and powerful opportunity. If you're an LLC or corporation, you should be having at least one formal meeting a year. You should have a written agenda, meeting minutes of what you discussed, major decisions, documented think salary decisions, major purchases, tax elections, any strategic plans and future plans. Well first off for asset protection to show that this is a real business and not just a hobby piggy bank. And then secondly for tax planning because meetings create opportunities for deductible travel mills and strategically using your home. Which brings us to one of my favorites. There's a section in the tax code that says if you rent out your personal residence for 14 days or less per year, you do not have to pay taxes on that rental income on your personal tax return. At the same time, your business can deduct ordinary and necessary expenses including the rent paid for legitimate business use. You put these together and here's the play. Your business rents your home for a board or strategy meeting content days planning sessions. You name pays a fair market rent for the space and the time used. The business takes a deduction for that rent and then you personally receive that income tax free within that 14 day limit. This is often called the Augusta Rule. It's named after a golf tournament where homeowners lobbied and would rent out their Houses to spectators and players during that tournament. But here's the key. The meetings must be real, the rent must be reasonable and we must have documentation. The date, the purpose, attendees, meeting minutes. And we cannot overdo it. Charge a fair market rent. This is not a rent it every other day of the year rescue plan, but it is a measured and calculated strategy that can have a big impact, especially as you add it up over the years. Once you start treating your board meetings as real events, it opens the door to travel deductions if meetings are held out of town for valid reasons. Meals and lodging tied to actual business discussions, in some cases bringing in your spouse as a legitimate participant, or older kids who actually work in the business and have roles. This ties into a broader conversation that we'll have in a later episode about paying your kids for real work, hiring your spouse, and using the business to compensate family members in a way that shifts income to over lower tax brackets while keeping wealth in the family. But again, the anchor is, is this real work and real planning? Are we just playing pretend for deductions? I only want my clients on the real side of that line. The next strategy is to clean up your entities. A lot of you listening. Have an old LLC for a side hustle that you don't run anymore, an entity that you formed in a different state just in case, or multiple entities that no one has explained how to actually use. Every one of those might be costing you an annual state fees triggering franchise tax or a minimum tax adding paperwork and risk with zero benefit. Year end is the time to ask which entities actually are serving a purpose. You should have a structure chart and if not, make a list of your LLCs, corporations and partnerships. Look at which ones are active, which ones hold assets, and which ones are just a bunch of paperwork that you've done nothing with. And then we shut down the zombies. We consolidate or restructure where it makes sense and we build whatever the new entities we know will need on January 1, not in the middle of the next year. An intentional structure is part of running a real wealth plan, not just having a bunch of random LLCs. All right, let's talk about our bonus topic before we land this plane. And it's a big one that can save a lot of people a lot of money. And it's the SALT workaround. If you live in a state with income tax and you're in a high income earner, you probably run into the cap on, um, state and local tax deduction on your personal return. The SALT workaround is a strategy available in many states and it allows your S corporation or sometimes partnership to elect to pay certain state taxes at that entity level. The then gets a full deduction for that on its federal tax return and you as the owner often receive a credit or adjustment on your personal state return. So um, in plain English we move the deduction from where your personal return has it limited to your business return where it can sometimes be fully deductible. Now is this for everyone? No, but it is mostly for people in states that have enacted a SALT workaround that have a higher income where we've run the numbers and it actually helps. But it is worth asking your advisor given my state and income level should we be using an entity level SALT election and if you get a blank stare that tells you something. So let's recap everything that we've just covered. S Corp timing and profit thresholds above roughly 50,000 profit as a general rule of thumb, you should at least be exploring S corp taxation. Salary versus distribution every 10k shifted from salary to profit continue save you around $1500 within the bounds of a reasonable salary year. End payroll tuning. You want your salary and distributions to look intentional by December 31st. Board and Advisory meetings treat your business like a business. Documentation is key. Build asset protection and tax benefits. The Augusta Rule legitimately allows you to rent your home to your company for short term use, capturing a unique deduction. You want to kill off any zombie entities and design a structure that matches your actual life and the SALT workaround for high earners in the bright states. Moving state tax deductions to the entity level. Even if two or three of these strategies apply to you and you're not using them today, your tax bill is almost certainly higher than it needs to be. And if you're at the point where you're thinking I don't just want the information, I want someone to actually help me execute this. Go to bristertaxlaw.com and Schedule A discovery call. Ask for our team and get a tax strategy session planned. On that call, we'll look at your current entity structure, we'll review your last personal and business returns and then we'll identify three to five moves that that makes sense for you. This year we'll build a plan to implement them so you're not scrambling in March or April of the next year. And in our next episode, we're moving from business entities into real estate and short term rentals. We're going to be breaking down exactly how people are using strs. Material participation, real estate professional status and partial asset dispositions to wipe out huge chunks of taxable income. If you've ever thought about owning a short term rental or you already do, you do not want to miss this next one. Thanks for watching. If you found this helpful, go ahead and give it a thumbs up. Drop a comment below and if you have any questions or thoughts, I always try to respond. And if you haven't already, hit that subscribe button. Ring that bell so you don't miss out on the next video. And if you want to go deeper or grab the resources that I mentioned, check the description below. I've got all the links, tools and next steps for you there and if you're ready to talk about your specific situation, you can also schedule a free discovery call using the link in the description. Just pick a time that works for you best and if you know someone who could benefit from this, feel free to share it with them. It really helps spread the word. Thanks again and I'll see you in the next one.
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