How to Structure Your $1M+ Business (and Stop Losing Six Figures in Taxes)
How to Structure Your $1M+ Business
(and Stop Losing Six Figures in Taxes)
If your business is past $1M in revenue, your entity structure could be costing you $50K–$100K+ every year. Learn when to upgrade to an S-Corp or C-Corp and how to fix it.
If your business has crossed $1M in revenue, there’s a high chance you’re losing $50K–$100K+ every year — not from weak sales, but from being in the wrong business structure.
The quick take
Most 7-figure owners outgrow their startup structure but never update it.
LLC, S-Corp, or C-Corp — the difference can mean six figures in annual savings or losses.
The right structure, paired with proactive planning, turns taxes from a burden into a profit lever.
The mistake most $1M+ owners make
The biggest mistake? Not evolving your entity as your business scales.
Many start as sole proprietors or LLCs, and it works fine at $100K–$200K. But once revenue passes $1M, that same setup costs 15.3% in self-employment tax on top of income tax.
- $100K profit = $15,300 lost
- $500K profit = $76,500 lost annually
So why don’t owners switch? Usually comfort and inertia. The process feels administrative — until you realize every year you delay is another six figures to the IRS.
Mini takeaway: If your structure hasn’t been reviewed since crossing $1M, you’re already overpaying.
Breaking down the options
LLC (default taxation)
Great for liability protection, but terrible for taxes at scale.
Every dollar of profit is hit with 15.3% self-employment tax. Fine for small businesses. Costly for 7-figure ones.
S-Corp (most common upgrade)
Lets you split income into salary and distributions.
Salary gets payroll tax, distributions do not — often saving $50K–$100K per year.
But balance is key:
Pay too much salary = lose savings.
Pay too little = IRS flags you.
Mini takeaway: The S-Corp is powerful when tuned correctly — and expensive when misused.
C-Corp (for scale and exit)
Best for companies raising capital, adding partners, or planning to sell.
C-Corps can open access to investors, benefits, and the Qualified Small Business Stock (QSBS) exclusion — worth millions in tax-free exit gains.
But beware: without strategy, you face double taxation — 21% corporate, plus 15–20% dividends.
Mini takeaway: A C-Corp is a weapon for scaling and exits — but only if it’s planned, not defaulted.
Beyond structure: the missing piece
Even the “right” entity fails without the right team.
Bookkeepers
Handle data entry and reconciliations — but rarely interpret or verify accuracy.
Controllers
Oversee accuracy, monitor KPIs, and help leaders actually understand the numbers.
Tax Strategists
Turn those numbers into proactive decisions: quarterly planning, entity optimization, credit capture, and long-term tax reduction.
Mini takeaway: The right entity matters. The right strategy team makes that entity work for you.
First steps and next moves
Step 1: Review your current tax exposure.
Are you paying self-employment taxes? Overpaying payroll? Missing credits?
Step 2: Define your goals.
Raising capital? Adding partners? Selling in 5 years? Your end goal drives the right entity.
Step 3: Work with a professional team.
At HavenStone, we review your structure, analyze your returns, and build a proactive tax plan tailored to your goals.
Common questions
When should I switch from an LLC to an S-Corp?
Usually once profits hit six figures consistently. The savings often justify the added payroll setup.
Is a C-Corp better for selling?
It can be. The QSBS exclusion can mean millions in tax-free exit gains if structured early.
Do I need more than a bookkeeper?
Yes — a controller and strategist ensure accuracy, insight, and proactive savings.
What to do next
Simple start: Review your structure and run a self-employment tax calculation.
Next level: See our Entity Structure Guide for Business Owners for in-depth scenarios.
Full service: with HavenStone. In 45 minutes, we’ll map your structure, show your exposure, and design your six-figure savings plan.
You’ve worked too hard to hand six figures back to the IRS. With the right structure and strategy, you keep more, scale faster, and build wealth that lasts.