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Fleming Accounting Solutions Case Studies

See how we’ve helped clients manage their payroll, accounting, and taxes more effectively and efficiently.

Case Study 3:

Software Startup — Formalizing as a C-Corporation for Scale

Client profile: Software company founded by four individuals. Early years showed operating losses funded by the principal founder, with others contributing capital and receiving contractor payments.

Challenge: The founders needed to formalize the entity before revenue inflected upward—choosing a structure that balanced near-term growth, future profitability, and investor expectations.

What we analyzed

Pass-through options (Partnership/S-Corp): Profits flow to individuals and get taxed at each owner’s marginal rate—likely 32–35% once the business scaled.

C-Corporation: Corporate income taxed at a flat 21% federal rate. Potential advantages for reinvestment, clean cap table management, and alignment with investor norms.

Outcome

  • The team incorporated as a C-Corporation before scaling revenue.
  • As profits materialized, topline growth did not immediately push owners into high marginal tax brackets, since income was taxed at the corporate level (21%) and retained for reinvestment.
  • The C-Corp structure also simplified equity issuance and positioned the company for future financing and governance best practices.
    • Note: Depending on facts and holding periods, founders/investors may explore potential §1202 Qualified Small Business Stock (QSBS) benefits in the future; eligibility is fact-specific and requires separate analysis.
Why it mattered:

A C-Corp aligned the company’s tax profile with its growth plans, helped preserve cash for reinvestment, and made future capital raises and stock planning more straightforward.

How Fleming Accounting Solutions approaches entity & tax strategy

Scenario modeling

We quantify tax impact, retirement options, payroll requirements, and cash-flow timing—then highlight trade-offs in plain English.


Implement & maintain:

We don’t just recommend; we handle elections, payroll setup, retirement plan coordination, and quarterly tax planning.


Iterate with growth:

As numbers change, we re-run scenarios so your structure fits your current reality—not last year’s.


Disclosure: Results vary by state, income mix, deductions/credits, payroll levels, “reasonable compensation,” and retirement plan specifics. Figures shown are client-specific estimates and should not be relied upon as universal outcomes.

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