Why 7-Figure Businesses Overpay Taxes (and How to Stop It)
Why 7-Figure Businesses Overpay Taxes
(and How to Stop It)
Crossed $1M in revenue? Here are the hidden tax leaks costing many owners $100K+ a year and proven ways to stop them.
If your business is past the million-dollar mark, you may already be sending $100,000 or more to the IRS each year without realizing it. Here’s why it happens and how to keep more of what you earn.
The quick take
Outdated structures and “file-it-and-forget-it” workflows are the top cause of six-figure overpayments.
Growth adds payroll, assets, and complexity, opening new leaks.
Write-offs are not strategy. The real savings come from timing, structure, and credits.
A tuned plan often puts $100K–$300K a year back into owners’ pockets.
Why 7-figure owners overpay
1) Your structure never matured
Many owners still run a multimillion-dollar business like an early side hustle: one entity, one return, one overworked bookkeeper. As revenue grows, so do payroll taxes, missed QBI deductions, and double-tax traps.
2) The real numbers
It is common to uncover $100K–$300K in avoidable taxes for companies doing $1M–$5M+ simply by updating entity design, compensation, and elections.
3) The business impact
Every extra dollar sent to taxes is a dollar not working toward new hires, marketing, capacity, or a future exit.
Mini takeaway: If your structure has not been updated since passing $1M, you are probably overpaying.
Growth creates new tax leaks
Complexity multiplies risk
More payroll, equipment, and acquisitions mean more ways for money to slip away: employment taxes, basis issues, nexus exposure, and missed depreciation.
Credits often go unclaimed
Owners frequently overlook R&D, energy incentives, and accelerated depreciation or amortization, not because they do not qualify but because no one is assigned to find them.
The entity mismatch
S-Corp: The wrong compensation mix can inflate payroll taxes.
LLC (disregarded/partnership): Many miss the 20% QBI deduction or fail to optimize guaranteed payments.
C-Corp: Double taxation hits hard without a distribution plan.
Mini takeaway: Each additional million in revenue without a tax blueprint makes the leaks larger.
The biggest myth: “I write off everything, so I’m fine”
Write-offs reduce income a little; true strategy changes the overall tax picture. Real savings come from:
Timing income and expenses.
Restructuring entities and elections to match profit patterns.
Leveraging credits that already fit your operations.
Exit planning for basis, QSBS potential, or charitable strategies.
We have helped owners save seven figures on a single sale simply by planning ahead.
The fix: a proactive seven-figure tax blueprint
1) Diagnose the structure
Right-size S-Corp wages, evaluate holding-company or OpCo splits, and choose the best entity mix for net after-tax income.
2) Engineer compensation and distributions
Balance reasonable compensation with distributions, retirement plan design, and health reimbursement arrangements.
3) Monetize existing activity
Capture R&D credits for internal process or software work, claim energy incentives, and time depreciation on vehicles, machinery, and improvements.
4) Guide implementation
Tax results depend on consistent habits: quarterly reviews, solid documentation, basis tracking, and mid-year adjustments.
At HavenStone we examine more than 60 factors, build a custom plan, and meet every quarter to implement it—from the Augusta Rule to charitable trusts and targeted depreciation plays. Many clients see six-figure savings each year.
Quick self-audit
Do you have a written entity and compensation plan for this year?
Are you tracking QBI, R&D, and energy credits before year-end?
Have you scheduled a depreciation plan for major purchases?
Is your distribution policy documented and tax-aligned?
Do you hold a quarterly tax strategy review with decision makers?
Two or more “no” answers usually means recoverable tax dollars are available.
Common questions
Do write-offs hurt when selling?
Poorly timed write-offs can reduce basis or increase recapture. Good planning weighs this year’s savings against exit math.
When does a C-Corp make sense?
When retention, benefits, or long-term scaling outweigh double taxation and you have a plan for extracting profits.
Is R&D only for tech companies?
No. If you pay people to design, test, or improve processes, software, or products, you may qualify.
What to do next
Simple start: Share this with your controller or bookkeeper and schedule a quarterly review.
Next level: See our Tax Strategies Guide for Business Owners and pick one or two actions to start this quarter.
Full service: If you want a proactive plan tailored to your numbers, . We will identify quick wins and create a 12-month blueprint.
You worked hard to build your business. With the right tax strategy, you keep more of your profit, scale with confidence, and build lasting wealth.