Dumb question maybe, but why are you setting up an S-corp if you're just a single-member LLC? I've heard the tax savings aren't worth the headache until you're making well over $100k profit. Now you've got this whole retirement plan complication too.

Your analysis looks spot-on! You're absolutely correct about the SEP-IRA being your best option for 2023. Just to reinforce what others have said - with your $95,000 W-2 wages from the S-corp, you can contribute exactly $23,750 to a SEP-IRA (25% of compensation), and you have until March 15th to both establish and fund it. One thing I'd add: make sure you're documenting your "reasonable salary" justification well. The IRS scrutinizes S-corp salaries, especially when the salary seems low relative to distributions. Your $95k salary on $405k in sales might raise eyebrows, so having solid documentation about industry standards for engineering consultants will be important. For 2024, definitely go with the solo 401k - the flexibility is unmatched. You'll be able to contribute up to $69,000 total ($23,000 employee + up to $46,000 employer contribution based on your salary). Just remember to establish it by December 31, 2024, though you have until the tax deadline to actually fund it. Also worth noting: if your income continues to grow, consider bumping your salary a bit in 2024. Higher salary = higher retirement contribution limits, and it might help with IRS reasonableness tests.

Mohammad, based on your $7,500 budget and logistics business, you should be in great shape! Office furniture absolutely qualifies as a legitimate business expense, and with that amount you'll likely be able to deduct everything immediately rather than depreciating over 7 years. A few key points for your situation: 1) **Section 179 or Bonus Depreciation** - Either option lets you write off the full cost this year instead of spreading it over 7 years. Your $7,500 is well under the limits. 2) **Timing flexibility** - Whether you buy everything at once or spread purchases doesn't change the tax treatment, but buying before Dec 31st gets you the deduction this tax year vs next. 3) **Business justification** - Since you mentioned client meetings, that conference table especially makes perfect business sense. The IRS loves seeing clear business purposes. 4) **Documentation** - Keep all receipts and consider taking photos of the furniture set up in your actual office space. Creates a clear record it's legitimately for business use. For a logistics/import business, professional office furniture for client meetings is definitely a reasonable and necessary expense. Just make sure everything you buy will be used more than 50% for business purposes and you should be golden!

Mohammad, just wanted to chime in as someone who went through this exact situation with my small business last year. The advice here is spot on - you're definitely in good shape with that $7,500 budget! One thing I'd add is to consider splitting your purchases strategically. For example, if you're on the fence about that conference table upgrade, you could buy the essential items (desks, chairs, filing cabinets) first to see how they impact your cash flow, then add the conference table later if things look good. Since both purchases would still qualify for immediate deduction either way, it gives you more flexibility. Also, don't forget about delivery and setup costs - those are typically deductible as part of the furniture expense too. When I bought our office furniture, the delivery fees added up to almost $300, but it all counted toward the business expense. The key thing everyone's mentioned about documentation is so important. I actually created a simple folder on my phone specifically for "office expense photos" and just snapped quick pics of everything as it got delivered and set up. Super easy but really valuable if questions ever come up. Your logistics business definitely has legitimate need for professional office furniture, especially for client meetings. The IRS generally doesn't question reasonable furniture purchases that clearly support business operations.

This discussion has been so helpful! I've been selling vintage clothing and accessories online for about 8 months, and honestly didn't realize how many shipping-related expenses I could be deducting until reading through everyone's experiences here. One situation I run into frequently that I haven't seen addressed - what about when you have to repackage items due to damage during initial packing? Sometimes I'll get an item ready to ship, realize the box is too small or the item got wrinkled, and have to start over with new packaging materials. Can I deduct the "wasted" packaging supplies, or only what actually gets used for the final shipment? Also, I've started offering expedited shipping options (overnight, 2-day, etc.) for customers willing to pay extra. These shipping costs can be pretty steep - sometimes $25-30 for overnight delivery. I assume these are all deductible just like regular shipping, but wanted to confirm since the amounts are so much higher than standard ground shipping. The insights about tools like taxr.ai and the Claimyr service for getting through to the IRS have been really valuable too. I'm definitely going to look into both of those as I try to get more organized for the upcoming tax season!

This thread has been absolutely fantastic for understanding shipping deductions! I've been selling vintage books and collectibles for about a year now, but I've been treating it pretty casually until the 1099-K changes made me realize I need to get serious about tracking everything. One specific scenario I'm dealing with - I often sell book lots where I combine multiple items into one shipment, but sometimes the combined weight pushes me into a higher shipping tier than I originally quoted. For example, I might quote $8 for shipping three books separately, but when packed together they end up costing $12 to ship due to weight limits. Can I deduct the full $12 even though I only collected $8 from the buyer? Also, I've been using a lot of recycled packaging materials (boxes from my own Amazon orders, bubble wrap from things I've received, etc.) to keep costs down. Obviously I can't deduct these since I didn't pay for them, but what about when I need to buy additional tape or labels to make the recycled materials work properly? The discussion about tools like taxr.ai and Claimyr has been really eye-opening. As someone who's been dreading the tax implications of the new reporting thresholds, it's reassuring to know there are resources available to help navigate this stuff without needing to become a tax expert overnight!

As someone who's been running a small electrical business for about 3 years now, I can relate to the confusion around vehicle deductions! When I first started, I made the mistake of not keeping detailed records and almost lost out on significant deductions during my first audit. One thing I learned the hard way is that the IRS really scrutinizes vehicle deductions for trade businesses. They want to see that you're using the vehicle primarily for business and that it's actually necessary for your specific type of work. For carpentry, you'll want to document things like transporting tools, materials, and equipment to job sites. I'd also suggest considering your long-term business plans. If you're planning to hire employees or expand significantly, that truck might become even more valuable as a business asset beyond just the immediate tax benefits. But if you're staying solo, make sure you're not over-buying just for the tax write-off. The mileage tracking apps mentioned here are lifesavers - I use one religiously now. Even if you think you'll remember your business vs personal use, trust me, you won't when tax time comes around. Start tracking from day one of ownership, not when you remember to set it up months later!

Reading through this thread as someone who just went through a similar decision process, I wanted to add a perspective that might be helpful. I run a small plumbing business and spent months agonizing over whether to buy a work van or continue renting as needed. What ultimately helped me make the decision was creating a simple spreadsheet that compared not just the tax implications, but the total cost of ownership including maintenance, insurance, depreciation (beyond tax benefits), and opportunity cost of the capital. The Section 179 deduction was definitely a factor, but it wasn't the deciding factor. For carpentry specifically, consider whether you'll actually need the truck's capacity regularly or if you're just buying it for the occasional large job. I almost bought a bigger van than I needed because the tax benefits looked so attractive, but my accountant pointed out that renting a larger vehicle a few times per year might be more cost-effective than owning something oversized for daily use. Also, don't forget about the practical aspects - parking a large truck at residential job sites, fuel costs for daily driving, and whether your local building supply stores can load materials efficiently into whatever vehicle you choose. The best tax strategy in the world won't help if the vehicle doesn't actually make your business more efficient or profitable.

I went through this exact same situation last year with a client who converted from C-corp to S-corp. The key thing that helped me was creating a detailed basis reconciliation worksheet that tracked everything chronologically. Start with the shareholder's original investment in the C-corp stock, then add any additional capital contributions made during the C-corp years, subtract any distributions received as a C-corp shareholder, and make any other basis adjustments that occurred before the S election date. That becomes your "conversion date basis." Then from the conversion date forward, you track all the normal S-corp basis adjustments (income, losses, distributions, etc.) on top of that foundation. One thing that tripped me up initially was making sure I had the exact conversion date right, because you need to split the year if they converted mid-year. The IRS is very particular about getting the timing correct for basis calculations. Also, definitely keep detailed documentation of how you calculated the beginning basis - the IRS loves to audit basis calculations on converted entities, so having a clear paper trail is essential.

This thread has been incredibly helpful! I'm dealing with my first C-corp to S-corp conversion and was completely overwhelmed by Form 7203. Reading through everyone's experiences and explanations has clarified so much. One thing I want to add that might help others - make sure you also check if there were any Section 1244 stock elections made during the C-corp years. This can affect how you treat certain losses, and I almost missed it on my client's conversion because it was buried in their old corporate records. Also, for anyone struggling with reconstructing basis when records are incomplete, don't forget to check state tax returns too. Sometimes they have additional detail that the federal returns don't show, especially regarding capital contributions or distributions that might not be obvious from just the federal filings. The advice about keeping detailed documentation cannot be overstated. I created a separate Excel workbook just for basis tracking with tabs for each year, and it's already saved me hours when the client had follow-up questions.