Wealth Management for Business Owners in Illinois

When a business is both your paycheck and a large part of your net worth, your financial plan cannot treat it as a separate subject. Wealth management for business owners coordinates the decisions that connect the company and the household: how you pay yourself, which retirement plan the business sponsors, how business taxes reach your personal return, and how much you invest outside the company.

At NRACPA, tax and accounting services are provided by NRACPA LLC. Investment advisory services are offered through Archer Investment Corporation. These are separate engagements, and clients are not required to use both. Our page on wealth management in Barrington explains the advisory relationship.

What is wealth management for business owners?

It is investment management and financial planning that treats the business as part of the plan. The portfolio side is familiar: building and monitoring investments around your objectives, risk tolerance, cash needs and time horizon. An owner’s plan also has to account for the business:

Owner pay. Salary and distribution decisions affect payroll taxes, retirement contributions and your personal return.
Retirement plan design. The plan your business sponsors sets how much you can save and what the business contributes for employees.
Business and personal taxes. Pass-through income, Illinois elections and business deductions can change the tax cost of personal investment decisions.
Liquidity and diversification. Reserves and investments outside the company give your household resources that do not depend on the business alone.
Transition and estate planning. A future sale or transfer affects your taxes, your investments and your estate plan.

The purpose is to weigh business and personal consequences together. It does not guarantee lower taxes or better investment returns.

How should you pay yourself from the business?

Start with the entity. If your business is an S corporation and you work in it, the IRS requires reasonable compensation before non-wage distributions can be made. What is reasonable depends on what you do for the business, your training and experience, and what comparable businesses pay for similar services (IRS).

The mix matters beyond the S corporation rules. Wages carry payroll taxes; for 2026, Social Security tax applies to wages up to $184,500 (IRS Publication 15). Owner compensation also affects how much you can put into a retirement plan, because contribution limits are tied to compensation. Illinois adds a 1.5% replacement tax on the net income of partnerships and S corporations, separate from the 4.95% individual income tax (Illinois Department of Revenue).

We consider how entity, salary and distribution decisions affect personal and business taxes. If you are considering an S corporation election, our small business accounting and entity selection page explains how we review eligibility and Form 2553 timing.

Which retirement plan fits a business owner?

The one that matches your income, your employees and how much you want to save each year. The main options differ in contribution limits, deadlines and what the business must contribute for employees (IRS Publication 560):

SEP IRA. The business can contribute up to the lesser of 25% of each person’s compensation or $72,000 for 2026 (IRS). If you are self-employed, your own contribution is limited to 20% of your net self-employment earnings (business profit minus the deduction for half of your self-employment tax), because the 25% is figured after the contribution itself. If the business contributes, it must contribute for every eligible employee under a written formula. A SEP can be set up and funded as late as the business’s filing deadline, including extensions.
401(k), including a one-participant 401(k). You can defer up to $24,500 of pay for 2026, plus catch-up contributions from age 50, and the business can add employer contributions. Total contributions for 2026 are capped at $72,000, not counting catch-up contributions (IRS).
SIMPLE IRA. Employees, including you, can defer up to $17,000 for 2026. At most businesses with 25 or fewer employees, the limit is $18,100, and a larger business can choose the higher limit if it contributes more. The business must either match deferrals up to 3% of pay or contribute 2% of pay for every eligible employee. A new SIMPLE IRA is generally set up between January 1 and October 1 of its first year.
Defined benefit plan. The plan provides a set retirement benefit, up to the smaller of $290,000 a year for 2026 or your average pay for your highest three consecutive years, and an actuary figures the contributions the business must make each year.

NRACPA helps owners compare these plans and set up the one that fits.

Illinois adds a consideration for residents. Pre-tax contributions lower federal adjusted gross income, the starting point of the Illinois return, and Illinois generally does not tax qualified retirement plan and IRA distributions that are included in federal income (Illinois Publication 120). How much that helps depends on where you live when you draw the money.

How do business taxes affect your personal investment plan?

In a partnership or S corporation, business income flows through to your personal return, so the business’s tax picture changes the tax cost of your investment decisions:

The Illinois pass-through entity tax. A partnership or S corporation can elect to pay Illinois income tax itself, at 4.95%, with a credit for the owners (Illinois Department of Revenue). The election remains available for 2026 and later years and is made annually. Under IRS Notice 2020-75, the entity deducts the payment, and it does not count against the owners’ state and local tax deduction limit. For 2026, that limit is $40,400 for most filers and shrinks, though not below $10,000, once modified AGI exceeds $505,000.
Where investments are held. Placing investments across taxable, tax-deferred and Roth accounts with taxes in mind can change your after-tax result. The right mix depends on your accounts, income and goals.
Gains, losses and Roth conversions. A year when business income drops may be a time to review a Roth conversion, and a year with a large gain may be a time to review losses elsewhere in the portfolio. Our guide to what to review before a Roth conversion covers the questions.
Timing. Late-year business decisions, such as equipment purchases, bonuses and retirement contributions, change the income your projection is based on. Our year-end tax planning checklist for Illinois lists the 2026 dates and figures.

How much of your wealth should stay in the business?

There is no single answer, but it helps to decide on purpose rather than by default. Profits kept in the business can fund its growth; money taken out can build reserves and investments that do not depend on the company. Questions to review each year:

Does the household have a cash reserve that does not rely on business cash flow?
Is cash set aside for federal and Illinois estimated taxes?
Does your insurance still match what your family and the business depend on?
Would your retirement savings be enough without selling the business?
Are your investments diversified away from your own industry and region?

Diversifying does not eliminate risk, and investing involves risk, including possible loss of principal. The aim is to know how much of your plan rests on one company and to decide whether that is the risk you want.

What changes when a sale or transition is ahead?

Start the tax and investment planning before the terms are set. The structure of a sale affects the tax on the proceeds, and the proceeds then become an investment and estate-planning decision. Questions to settle early:

What you expect to keep after federal and Illinois tax
How much cash the taxes will require, and when
How and when the proceeds will be invested
Whether your estate documents still fit the new balance sheet

Illinois’s estate tax can apply once an estate, plus adjusted taxable gifts, exceeds $4 million, compared with a federal basic exclusion of $15,000,000 for 2026. Our article on the Illinois estate tax threshold explains the difference.

Valuation and succession planning involve other professionals, such as a business appraiser and an attorney. NRACPA refers that work to appraisers and attorneys. NRACPA may receive a referral fee. David coordinates the tax questions through NRACPA LLC and, for advisory clients, the investment questions through Archer.

How does NRACPA work with business owners?

NRACPA has served families and businesses across the Northwest Suburbs since 2008, from its office in South Barrington. David R. Robbins, CPA, works across both areas: tax and accounting through NRACPA LLC, and investment advice as an investment advisor representative of Archer Investment Corporation. The engagements are separate, and you can use either or both. Our tax preparation and planning services in Barrington cover business and personal returns.

The advisory process has four steps:

An introductory conversation. Discuss your goals and decide whether the services fit. It is free, with no obligation.
Discovery and planning. David reviews your accounts, tax returns, timeline and risk tolerance to develop a written plan.
Implementation. Accounts are opened in your name at a custodian, and the agreed investment strategy is put into action. Any tax work is done by NRACPA LLC under its own engagement.
Ongoing reviews. David reviews your portfolio and plan as markets, tax considerations and your circumstances change.

Advisory fees and services are described in Archer’s Form ADV Part 2A.

Start with your questions

Bring recent business and personal tax returns, investment and retirement plan statements, and the decisions you expect to make this year. Prospective clients can book a free initial consultation. If you already work with the firm, book a meeting to review your plan.

Investment advisory services are offered through Archer Investment Corporation. Tax and accounting services are provided by NRACPA LLC. Clients of either firm are under no obligation to engage the other. Investing involves risk, including possible loss of principal. Fees, services, and conflicts are described in Archer’s Form ADV Part 2, available upon request. The Part 2A brochure is also at adviserinfo.sec.gov. NRACPA’s disclosures and regulatory documents describe both relationships.

Sources

Figures reflect IRS and Illinois guidance available as of October 19, 2026. This article is general information only, not individual tax, legal or investment advice.

This article provides general information only, not individual tax, legal or investment advice. Tax and investment decisions depend on your individual circumstances and current rules. Contact the office to discuss your situation.