You’ve probably heard the story: Warren Buffett pays a lower tax rate than his own secretary. And while it’s easy to chalk that up to billionaire privilege, the truth is more nuanced—and more relevant to you as a business owner. What Buffett and his peers understand is how to leverage sophisticated tax strategies that minimize liability. The surprising part? These strategies aren’t just for the ultra-wealthy. They’re accessible. And if you’re not already using them, you’re likely leaving money on the table.
Why Wyoming (Yes, Wyoming) Has Become a Go-To Tax Strategy
When people think about tax havens, they picture the Cayman Islands. But you don’t have to go offshore to reap similar benefits. Wyoming (along with Nevada and a handful of other states) offers no state income tax and some of the strictest privacy protections in the country. That’s why high-net-worth individuals and large corporations set up holding companies there.
For small business owners, forming a holding company in a state like Wyoming isn’t just about privacy—it’s a way to create flexibility. You can add partners, sell equity, or restructure without exposing yourself to unnecessary taxes or administrative headaches. And yes, it’s completely legal.
Action Item:
If your business is generating serious revenue, consider whether a holding company structure in a tax-friendly state could lower your overall liability.
The LLC Misstep That Costs Business Owners Every Year
Most small business owners form an LLC because it’s easy. But where you form it—and how you use it—matters more than you think.
For example, setting up an LLC in your home state (say, California or New York) might subject you to hefty state income taxes and franchise fees. By contrast, forming in a state like Wyoming or Nevada can mean no state income tax and stronger asset protection.
Action Item:
Review where your LLC is formed and whether relocating it (or establishing a parent company in a more favorable state) makes strategic sense.
The Entity Structure Mistake That’s Costing You Thousands
Here’s the one I see all the time: business owners running successful companies as sole proprietors (or single-member LLCs taxed as such), when they should be operating as
S-corporations—or even C-corporations.
S-corp status allows you to split your income between a salary and distributions, minimizing self-employment tax. C-corps, while not ideal for everyone, offer opportunities for income shifting and potential access to lower corporate rates. Getting the structure right is fundamental to any effective tax strategy.
Action Item:
Reassess your current business entity. If you haven’t revisited your structure in the last couple of years, you’re overdue.
Advanced Structures: Not Just for Billionaires
When you’re thinking long-term wealth preservation, consider the strategies you’d typically associate with the ultra-wealthy. Private placement life insurance (PPLI), for example, can be an efficient way to shelter gains from taxes while protecting assets.
Now, these strategies aren’t entry-level. But they’re also not reserved for billionaires. If your net worth is steadily growing, it might be time to explore advanced planning.
Action Item:
Talk to an advisor about when (and if) strategies like PPLI or asset protection trusts make sense for your stage of business growth.
Minimizing taxes isn’t about loopholes or gimmicks. It’s about understanding the rules and using them to your advantage—just like the most sophisticated investors do. Whether it’s forming in the right state, choosing the right entity, or exploring advanced planning techniques, the opportunities are out there. The question is whether you’re ready to take them.
Want to see how these strategies could work for you?
Schedule a consultation with Nth Degree CPAs today. We’ll help you build a tax strategy that fits your business—and your long-term goals.
