Tax Saving Guide for Solo Founders
Unlock Tax Wins: A Founder’s Guide to Smarter Wealth Strategies
Hey everyone,
If you’re a solo founder, today’s edition will have at least 1 new idea you can implement and save money on taxes.
Today, I wanted to share 5 specific tax strategies from our friends at Carry.
I previously did a dedicated (unpaid) feature on Ankur Nagpal who is behind Carry because I love his way of building in public.
I have been following their “end of year” content on X and Substack on their tax strategies and figured it would be fun to collaborate with them and bring you some tactical advice.
So here we are: I am sharing a guide that Carry’s team helped me put together.
Quick FYI: This isn't official financial advice — always remember to consult a tax professional for the perfect tailored guidance on your unique situation.
Here we go:
Tax planning isn’t just for April—it’s your secret weapon for keeping more of what you earn.
When you’re a founder, every dollar matters. Taxes might not feel urgent now, but here’s the deal: the choices you make today could mean the difference between reinvesting thousands back into your business or giving it away unnecessarily. The right tax strategy can extend your runway, fund your next hire, or even help you build long-term wealth.
We’re not talking about boring accounting tactics. We’re talking about founder-first strategies designed to help you grow wealth while keeping the taxman at bay. Let’s dive in.
1. Solo 401(k): A Retirement Plan Built For Founders and Side Hustlers
The Solo 401(k) isn’t just a retirement account—it’s a tax advantage designed for the self-employed. If you’re earning income through your startup or freelance work, this is your ticket to reducing taxable income while growing your nest egg.
How it works:
You can contribute as both an employee and an employer, with the total limit capped at $69,000/year in 2024. Contributions can be tax-deferred (lower taxes now) or Roth (tax-free growth later).
Why it matters:
Maximizing your contributions drops your taxable income, allowing your investments to grow tax-free, potentially saving you thousands in taxes. It’s ideal for founders who want to build wealth without sacrificing liquidity.
💡Pro tip: Start small if cash flow is tight, but aim to contribute consistently. Pairing this with the Roth IRA (see below) gives you the ultimate retirement toolkit.
2. The S-Corp Tax Hack
Ever feel like you’re paying too much in self-employment taxes? That’s because you probably are. Structuring your business as an S-Corp could save you thousands and significantly reduce your tax burden.
How it works:
With an S-Corp, you divide your income into two parts:
Salary: Subject to payroll taxes.
Dividends (distribution): Not subject to payroll taxes.
Why it matters:
This strategy alone can save you up to 15.3% on your non-salary earnings. For founders pulling six figures, those savings add up fast. For example, if your startup earns $150,000 and you pay yourself a reasonable salary of $60,000, only that salary is subject to self-employment taxes. The rest is taxed as dividends, saving you up to 15.3% on $90,000—a savings of over $13,000.
💡Pro tip: Consult an accountant before making the switch—timing is everything.
3. Maximize Write-Offs: The Everyday Expenses You’re Probably Missing
Think beyond laptops and co-working spaces. As a founder, you’re entitled to deduct many “ordinary and necessary” business expenses. Here’s how to make the most of them:
Write-Off Categories to Explore:
Home Office: Deduct a percentage of your rent/mortgage and utilities if you work from home.
Tech Tools: Subscriptions like Zoom, Notion, Slack, Carry, and project management software.
Travel: Flights, hotels, and even meals if they’re tied to client meetings or conferences.
Professional Development: Books, courses, or coaching that directly improve your business skills.
Why it matters:
Every dollar you deduct lowers your taxable income, keeping more cash in your pocket.
💡Pro tip: Keep a clean record of receipts and categorize expenses monthly to avoid end-of-year chaos.
4. The Roth IRA Backdoor
The Roth IRA is one of the most powerful tax-free growth tools, but high earners often assume they don’t qualify. That’s where the “backdoor” strategy comes in.
How It Works:
Contribute to a traditional IRA.
Convert the funds to a Roth IRA, paying taxes on the initial amount.
Once converted, your money grows tax-free, and withdrawals in retirement are tax-free.
Why it matters:
Grow your money tax-free and withdraw it in retirement with no tax bill.
💡Pro tip: Pair this with a solo 401(k) for maximum tax-free growth and work with a financial professional to time the conversion strategically, especially if your income fluctuates.
5. The Long Game: Equity, Exit, and Taxes
If you’re building a company with a potential exit, think ahead about Qualified Small Business Stock (QSBS). QSBS is a gift for founders building towards an exit. It’s a provision that can exempt up to $10M (or 10x your investment) in capital gains from federal taxes. Yes, you read that right—$10M.
How It Works:
Your startup must be a C-Corp.
Shares must be held for at least 5 years.
Your business must meet specific size and industry criteria (e.g., <$50M in assets at the time of issuance).
Why It Matters:
If you sell your company for $15M and meet QSBS requirements, you could save millions in capital gains taxes.
💡Pro Tip:
Start planning early. QSBS benefits only apply to shares issued when your company qualifies, so timing is key.
Ready to Keep More of What You Earn?
The best tax strategies aren’t one-size-fits-all. They’re tailored to your income, business stage, and growth goals. Whether you’re bootstrapping or VC-funded, there’s a path to optimize your taxes and free up more cash for what matters most—your vision.
Curious how these strategies could work for your situation? Learn more with Carry.
And that is all for this edition. Hope this guide was helpful!
No pressure but whenever you’re ready, here are a few ways I can help you:
Schedule a quick 1:1 mentorship call with me to get specific tactical and personalized guidance on your product’s go-to-market strategy, Product Hunt launch planning and how to fall in love with build in public.
If you are planning a huge Product Hunt launch for your product and need my help as a hunter, fill out this form and let me know. Or reach out to me directly on my DMs on Twitter. I get pitched a lot but I hand-pick 2-3 launches a month where I can genuinely add value and make sure I amplify those across my 70,000+ audience and growth channels.
If you have a business you want to promote to my ~7,000 email and ~55,000 Twitter audience, DM me on Twitter.
(in America)
saved for future reference!