It can be a big change going from a proprietor business to an S-Corp. From the business owner's point of view, it might seem like nothing has changed, but from a legal and tax structure, they are really worlds apart.

A common mistake we see all the time is taking money out of the business whenever the owner wants to. Not only can this cause you real tax problems, it also creates confusion and will hinder your ability to grow.

It's always important to keep books and bank accounts separate, especially when you start to expand to the point where you have more than one entity.

What many new S-Corp owners don't realize is that if you take out more money than you put in, or if you take out more than you earned, you create a tax liability for the excess!

We saw so many owners get into trouble during the pandemic by taking loans from the government for their business, and then taking money out for themselves from their business—all in an effort to simply survive. Nevertheless, these are mistakes business owners simply cannot afford to make.

In the case of our client, understanding how to work with the multiple entities of his business properly resulted in a great success! With good planning we were able to move certain expenses into the entity that was making more money, evening things out overall, and ultimately saving him $3,200 in capital gains tax.

All of this shows how planning is key, but understanding how all your entities work is critical.

If you have multiple entities, or are making over seven figures, it's time for a Personal CFO to oversee your big-picture—over your family office and over your businesses.