What’s the biggest financial mistake $1M+ owners make?

Not reviewing their entity, owner compensation, and tax strategy regularly. These three factors determine how much of every dollar you actually keep.

How much cash reserve should I maintain?

Most 7-figure companies should hold 3–6 months of operating expenses — enough to cover payroll, debt, and core operations through market shifts.

What’s the difference between deductions and strategy?

Deductions reduce taxable income for the year. Strategy restructures how income flows, comp is paid, and credits are used — saving six figures long-term.

The Best Financial Strategies for $1M+ Business Owners (CPA Explained)

Name: The Best Financial Strategies for $1M+ Business Owners (CPA Explained)
Uploaded: 2025-11-07:08:00Z
Duration: 4 min 6 s
Description: If your business has passed $1M, leaks in taxes, structure, and cash strategy could be costing you $100K+ a year. Here’s how to stop the bleeding and scale strategically.

If your business has passed $1M, leaks in taxes, structure, and cash strategy could be costing you $100K+ a year. Here’s how to stop the bleeding and scale strategically.

Mia Anne Pham Reeves, CPA, Managing Partner

11/7/2025

Video11/7/20254 min watch4 min read

If your business has crossed $1M, your biggest risk isn’t sales — it’s leaks.
Leaks in taxes, structure, and how you pay yourself. Most owners don’t see them until they’ve lost $100K+. Here’s how to stop the bleeding.

The quick take

At seven figures, bookkeeping and hustle aren’t enough.
Strategy = clarity + structure + cadence.

Without it, taxes, cash, and comp quietly erode your profit.
With it, you gain control, consistency, and scalable wealth.

The biggest blind spot for $1M+ owners? No financial clarity.

No timely P&L.
No reconciled balance sheet.
No monthly close.

When you don’t have data, you make emotion-based decisions:

Over- or under-hire
Overspend or freeze spending
Overpay or underpay taxes
Let outdated structures ride for years

Mini takeaway: No monthly numbers = no control. At seven figures, clarity is your edge.

How scaling bleeds taxes

Growth brings complexity: payroll, states, vendors, sales tax, and compliance.
If your systems and structure don’t evolve, you overpay.

Six-figure tax traps

Wrong entity:
- LLC → full 15.3% self-employment tax.
- S-Corp → savings only if salary/distribution balance is right.
- C-Corp → double taxation if profits aren’t planned.
No quarterly planning: leads to $100K+ April shocks.
No credit strategy: R&D, energy, and depreciation credits go unclaimed.
Sales tax neglect: liabilities quietly snowball.

Entity = outcome

S-Corp: saves on SE tax via balanced salary + distributions.
C-Corp: great for fundraising, investors, or QSBS — if planned.
LLC: flexible, but costly without elections at scale.

Mini takeaway: Every extra million in revenue without a plan multiplies tax mistakes.

What actually saves you money

Myth: “It’s all write-offs.”

Real strategy isn’t receipts — it’s timing, structure, and compensation.

1. Compensation strategy (owner pay)

S-Corp: combine W-2 salary (with payroll tax) + distributions (no payroll tax).
Partnerships: balance guaranteed payments vs. profit allocations.
C-Corps: plan salaries, bonuses, and benefits to manage double taxation.
Pay too much → burn cash.
Pay too little → audit risk.

2. Reinvestment vs. reserves

Reinvesting everything = cash chaos.
Keep 3–6 months of expenses in reserves.
If monthly burn is $70K → target $210K–$420K.
Then budget the rest:

100% revenue
~40% COGS → 60% margin
~40% operations (sales, marketing, admin)
Review KPIs monthly.

3. Credits, depreciation, elections

Claim eligible credits (R&D, energy, depreciation).
Align timing of purchases, bonuses, and distributions.
Use depreciation strategically — not reflexively.

4. Monthly close discipline

Bookkeeper: records history.
Controller: ensures accuracy, builds KPIs.
CPA/Strategist: converts data into tax and growth decisions.

5. Reinvestment danger

“Growth” spending without modeling leads to:

Payroll you can’t sustain
High-interest debt
Asset fire sales

6. $1M vs. $10M mindset

$1M operators: reactive, emotional, inconsistent.
$10M CEOs: data-driven, structured, and proactive.

Mini takeaway: Deductions save dollars. Strategy saves businesses.

Quick wins you can do today

Monthly close: P&L and balance sheet reconciled and reviewed monthly.
Owner pay audit: Reassess your salary, distributions, and elections.
Quarterly plan: Forecast taxes and build reserves so April isn’t painful.

Loop closure: Plug leaks through structure, compensation, reserves, and consistency.

How HavenStone helps

Our process for $1M+ owners:

Audit: entities, books, returns, sales tax exposure, cash cadence.
Identify gaps: missed credits, risky comp, outdated structure.
Implement: entity elections, owner comp plan, quarterly tax and cash strategy.
Monitor: monthly closes, quarterly reviews, and annual optimization.

You’ll see what to change, why it matters, and its dollar impact.

Common questions

How do I know if my entity is wrong?
If you’re paying full self-employment tax on profit or haven’t reviewed structure in 3+ years, it’s time to evaluate.

How much should I keep in reserves?
3–6 months of operating expenses depending on volatility and seasonality.

Can I do this with just a bookkeeper?
No. You need a CPA to engineer the strategy and a controller to enforce it.

What to do next

Simple start: Review your P&L, balance sheet, and owner compensation with your CPA.

Next level: Explore our CPA Tax Strategy Guide to deepen your planning.

Full service: with HavenStone. We’ll analyze your structure, show the leaks, and map your six-figure savings plan.

You built a seven-figure business. Now build the systems that keep what you’ve earned — and fuel your path to eight.

Compliance note: This article is educational, not tax advice. Federal/state dates and rules can vary by entity, year, and facts. Work with your CPA.