Fraim, Cawley & Company, CPAs

After several years in practice under the firm name “Micah Fraim, CPA”, we reached that same place that many of my clients do. We had grown nicely but now had too many clients for me to handle myself. 

So I hired another CPA so we could continue to expand. We gave them full autonomy along with a multi six figure compensation package. And we wanted them to be the cornerstone of all future growth and new hires in the company. The sky really was the limit for this position.

Unfortunately, I hired the wrong CPA. I won’t go into details because I’m not trying to be disparaging to them. But it could not have been a worse fit for what each side wanted and needed, so within about a month we parted ways.

In February. Right in the middle of tax season. After I had already initiated some massive marketing initiatives to bring in new business. So for the next 3 months I ended up working 100+ hour weeks every week just trying (and failing) to keep up.

Once tax season was over, I was forced to take stock of my situation and decide on what to do next.

I could not go through another tax season like that again. That tax season prior, I had worked through excruciating pain from a back injury that required spine surgery as soon as tax season was done. And even that was less painful than the tax season I had just gone through.

So we searched for the highest calibre accountant possible. And not just someone who could understand tax law, but someone who could do everything that I already did for clients. And given that most CPAs can’t seem to see the forest for the trees, I wasn’t particularly optimistic.

But we found him. Someone who was the perfect fit for what we needed. And I made a decision I would have never even imagined making years prior:

To give up part of my company and bring a partner into the firm. That was the birth of Fraim, Cawley & Company, CPAs.

Since then we’ve continued to grow, have been better able to serve all of our clients, and life could not be better.

Founder

Norfolk Southern

As an accountant, especially one fresh out of school, you tend to see the world as fairly black and white. Reg X states Y, therefore Z. There is little room for flexibility and nuance. The rules state something and that’s the end of the discussion. Or a contract has a specific provision and therefore it must be followed to the letter. Period.

But my first job out of college (miserable though it may have been) proved invaluable in quickly breaking me of that mindset.

I was the only accountant on a team of five analysts in a department of 50 people - the rest of whom were focused on marketing and sales.

Things balancing exactly was not the focus. Sometimes, it was a distraction. These were a small group of people managing $3 billion in annual sales. Getting caught up in tiny details had merit at times but many times it did not. And sometimes it was best to leave some money on the table - even if the contract stated it was owed - if it was going to be detrimental to the relationship with a client. Squeezing an extra $200k in overage charges out of a client sounds nice until they go elsewhere and take the $50 million contract with them.

This sounds basic, but this is not a perspective that few accountants are able to truly comprehend. They will become so hyper focused on what is good for very specific parts of their clients’ businesses that they end up giving them advice that is detrimental to the businesses on the whole.

But this was my first taste of the kind of flexible problem solving that eludes most CPAs. That is what we help our clients with daily - coming up with creative solutions to help them be profitable while taking their entire business’s operations into account.

Business Planning Analyst

Most CPAs are great at taxes and terrible at everything else. Taxes are still my focus, but I advise people on what is best for the business overall - not just from a tax perspective. My firm deals with businesses of all kinds, but we especially focus on online and other highly scalable businesses.

My career started in one of the strangest of all places: the railroad (although I wasn’t driving the trains). I worked as a business analyst for one of their marketing departments.

And like most entrepreneurs trapped in a corporate setting, I hated it. Every single minute of every single day.

I hated it so much that I applied to jobs in about 100 different COUNTRIES – thinking that I didn’t just need to leave the job or state – no, I needed to leave this part of the globe entirely.

But thankfully before booking a flight, I realized the corporate setting was the issue. So I started my own CPA firm – focused on advising small businesses on how to grow and become more profitable.

And it was AMAZING. I’d never been so happy in my life. Helping entrepreneurs was (and still is) one of the most fulfilling things I’d ever done. Every day was varied, every situation was different, and I felt like I was making a difference in these business owners’ lives.

But after a few years, something started to bother me. Something it took a few years to fully identify:

While the situations were constantly changing, oftentimes the outcomes weren’t.

In the first few years, most of these businesses would have great growth and success. But due to bandwidth issues, the limitations in the business’s industry, the owners being satisfied with being “self-employed” (read: having a job without a direct boss) rather than truly building out a self-sustaining business – many of these companies failed to ascend past a certain point of success. They plateaued. And for some mix of the reasons above, they were never able to break beyond that initial level of success.

So as a firm we changed our focus. Now we specialize working with those who have scalable businesses. For those we don’t know how to scale, we help lay out the path. And for those who do, we help them navigate that growth.

Now I get to spend every day doing what I love to do: working with super successful entrepreneurs to grow their businesses, save on their taxes, become more profitable, and make more money.

The $600 rule for 1099s has finally changed after more than half a century.

For years, if you paid a contractor or service provider more than $600, you had to send them a 1099. That rule was set in 1954. If it had kept up with inflation, the threshold would be over $7,000 today.

Starting with the 2026 tax year, the threshold is now $2,000. Even better, this new limit will increase with inflation each year. This means less paperwork for many small business owners and freelancers. Fewer forms. Less busywork at tax time.

There is more. For online platforms and payment processors, the Form 1099-K rules are going back to the old test. You only get a 1099-K if you have more than $20,000 in payments and over 200 transactions in a year. No more surprise 1099-Ks for small side gigs or casual sales.

This is one of those quiet changes that will save time and stress for a lot of people running small businesses or working for themselves.

Did this update make your life easier, or are you still dealing with 1099 headaches?

Micah Fraim, CPA

CPA for online and growth-driven businesses | Tax strategist | Bestselling author featured in Nasdaq, Forbes, and Money

"Can I avoid state income tax by registering my LLC in a different state?"

I get this question all the time. The dream is simple: live in a high-tax state, register your business somewhere like Wyoming or Nevada, and skip the state taxes.

But here’s the truth: it does not work that way.

If you live in a state with income tax, your business income, no matter where your LLC or S-Corp is registered, flows to you and gets taxed by your home state. Hawaii, New York, California, wherever you reside, that’s who wants their cut.

Even if your entity is "domiciled" far away, your residency is what counts. Not where you filed the paperwork.

There are no magic states when it comes to pass-through income tax.

Still confused? You’re not alone. Most entrepreneurs find state tax rules a maze.

What would you try if you didn’t have to worry about these rules?

Most S-Corp owners are leaving money on the table and they don’t even know it.

I see it every week.

You form an S-Corp, hoping to cut taxes... but then you miss the fine print and IRS traps that wipe out your savings.

Here are 7 brutal tax lessons every S-Corp owner needs to remember (and most CPAs won't tell you):

→ QBI isn’t automatic. Model it every year. That “20% off profits” headline? Only if you do the math, otherwise, it disappears.

→ The higher your profits, the more your W-2 salary strategy matters. Set it wrong, and the IRS comes knocking (or you miss out on big savings).

→ W-2 wages don’t just keep you compliant. They are the ticket to the full QBI deduction if you’re raking in serious income.

→ A $0 salary may sound clever for taxes, but it means no retirement contributions, no long-term wealth building, no safety. And at higher income levels: more in taxes.

→ In certain industries (the IRS calls them SSTBs), your QBI deduction vanishes at higher income. The more you make, the faster it goes away.

→ That “contractor” status? Sometimes, switching to employee saves you more than you think, especially when you look long term.

→ If your CPA isn’t modeling all of this for you annually, you’re flying blind. Or worse, leaving money for the IRS.

Tax law isn’t about hacks. It is about strategy and timing.

I see entrepreneurs fall for shortcuts. They end up with big surprises and bigger bills.

Want to actually keep more of what you earn?

Find a CPA who models your numbers, not just files your forms.

If your advisor looks confused when you mention QBI or SSTBs, don’t walk, run.

Which one of these surprises you the most?

I share weekly, actionable tax lessons for business owners who want more than just “good enough.” Follow if you’re ready to outsmart the system.

Many S-Corp owners miss out on massive tax savings because they take the too LOW of a salary.

You read that right. 
Get your salary wrong, and you could lose tens of thousands every single year because of the QBI deduction.

Here’s what actually happens when we model real salaries for S-Corp single filers:

→ $200k profit: Salary doesn’t change your QBI deduction. 
→ $500k profit: Skip the salary, and you pay $2k more in taxes. But you had no Social Security contributions and the IRS will be all over you. 
→ $1M profit: Tweak the salary, and suddenly you’re saving over $20k. 
→ $2M profit: Nail the number, and you keep $65k in your pocket.

What does this tell you?

1. Low salaries are great until your profit goes over $400k. Then the IRS cash register starts ringing.
2. You don’t need to do anything crazy. Even small salary increases can open up big deductions.
3. The “just pay yourself the lowest possible salary” advice is outdated. Smart planning wins, always.

Here’s the kicker: Most CPAs never model this for you. 
They just go by the old playbook and hope it works out.

And that’s why S-Corp owners leave so much money on the table.

If you’re an S-Corp owner (or thinking about it), maybe it’s time to stop guessing and start modeling.

Which salary scenario fits you? 
Ever had your CPA walk you through this before? 
Would love to hear if this sounds familiar or totally new.

You might have seen headlines about “no tax on tips” and “no tax on overtime.” It sounds like a huge change, but the details matter.

Here is what is actually happening. For tax years 2025 to 2028, there will be a new deduction for tips and for overtime pay. But this is not the same as making tips or overtime completely tax-free.

For tips, you can deduct up to $25,000 per year from your income. The deduction starts to phase out if your income goes over $150,000, or $300,000 if married filing jointly. The tips have to be from jobs where tipping is normal, like restaurants or salons. Also, this is a deduction you claim at tax time. It does not change your paycheck during the year.

For overtime, it is a similar deal. You can deduct up to $12,500 for single filers or $25,000 for married filers, but only for the overtime premium part of your pay. It also starts to phase out at the same income limits. Just like tips, you only see the tax benefit when you file your return.

Both of these deductions are temporary and will end after 2028.

The headlines make it sound like you will never pay tax on tips or overtime again. The reality is much more limited.

Does this change how you think about your pay, or does it seem like just another short-term tax tweak?

There is a new $1,000 “baby deposit” for kids born between 2025 and 2028.

Here is how it works. Every baby born in those years will get a $1,000 deposit into a special savings account called a Money Account for Growth and Advancement. Parents and employers can add more money each year, up to a certain limit.

The money is locked up until the child turns 18. After that, they can use it for things like college, job training, starting a small business, or buying their first home. Up to half the money can be used between ages 18 and 24, and the rest is available after age 25.

Earnings in the account grow tax-free. When the money is used for qualified expenses, it is taxed at long-term capital gains rates, which is usually lower than regular income tax. If the money is used for something else, it is taxed at regular rates and there is a 10% penalty.

This is a new idea in the tax code. Will it help kids build a financial foundation, or will it mostly be forgotten?

Would you take advantage of this if you had a new baby on the way?

If you’re an S-Corp owner making serious income, that “keep your salary low” tax trick might actually be costing you big.

Here’s the problem:

Old advice says pay yourself as little as possible to dodge payroll tax.
But once your income goes up, a too-low salary can wipe out your 20 percent QBI deduction.

This hits hardest for higher earners.

I’ve seen owners who thought they were being smart, then pay an extra $65,000 in taxes just because they kept their salary too low.

The new math:
Low salary means you miss the QBI deduction.
Right-sized salary means a massive tax break.

It feels backward, but this is straight out of the 2018 tax law changes.
So if you’re still following pre-2018 advice, you could be losing money year after year.

How long has it been since you reviewed your salary strategy?
For high earners, one small adjustment could save a fortune.

Curious if this applies to you?

Most S-Corp owners are losing money every year, and they don’t even know it.

You set your salary once, hope it’s “reasonable,” and just keep rolling with it.

But that’s not how you win the S-Corp game.

The truth?

It takes a checkup, every single year, to get the tax savings you deserve.

Here are 7 things every S-Corp owner should put on their annual checklist:

→ Recalculate your salary with updated QBI numbers. This isn’t a “set and forget” situation.
→ Double-check you’re not accidentally stuck in the dreaded SSTB category. One wrong turn and you’re out of big tax perks.
→ Compare your W-2 wages to total S-Corp profits. Are you leaving easy savings on the table?
→ Ask your CPA if they are actually running QBI phaseout numbers or just guessing. 
If they aren’t modeling, you could be overpaying.
→ Think about whether adding employees or contractors is smarter for your bottom line.
→ Actually learn what “reasonable compensation” means for the IRS (it’s not what your friend’s cousin says it is).
→ Make sure your salary isn’t just legal, but lined up to maximize deductions and minimize headaches.

These aren’t nice-to-haves.

They’re the difference between “normal” tax bills and saving tens or hundreds of thousands over time.

Small tweaks, every year.

Huge impact.

If you’re not checking these boxes, you’re probably leaving a pile of money for the IRS.

What’s your biggest question or frustration about setting your S-Corp salary?

There is a big change coming for gamblers starting in 2026. From now on, you can only deduct gambling losses up to 90% of your winnings.

So if you win $20,000 but lose $20,000, you will still have to report at least $2,000 as taxable income. Even if you lose as much as you win, you cannot fully wipe out your gambling winnings on your tax return anymore.

This new rule is going to create “phantom income” for a lot of people. But here is the thing. Many taxpayers were already getting hit with phantom income under the old rules, even before this change – they just didn’t realize it.

How? First, gambling losses are only deductible if you itemize, and 91% of taxpayers do not. Second, even if you do itemize, losses only reduce your taxable income, not your adjusted gross income (AGI). Your winnings increase your AGI, and that higher AGI can impact everything from tax credits to how much you pay for health insurance. The losses do not help with those calculations. A lot of people ended up paying tax on money they never actually kept, but they likely did not realize that was happening.

So while the 90% rule makes things tougher, the truth is that many gamblers were already paying tax on money they lost.

Did you know how much gambling wins can really complicate your taxes, or is this all news to you?

Individual tax rates are no longer set to expire or increase in the next few years.

The top rate was supposed to jump from 37% back up to 39.6%. Other brackets were also going to rise. These higher rates would have hit a lot of people after 2025.

Instead, Congress decided to keep the current rates in place. They are now permanent.

What does this actually mean? No sudden rate hikes to plan around. No urgent changes you have to make right now. You get to work with the tax brackets we have and stop worrying about automatic increases.

Uncertainty in tax rates makes it hard to plan for the future. At least on this front, things are staying steady for now.

Do you feel more comfortable making longer-term plans now, or do you expect changes anyway?

There is a lot of talk about the higher SALT cap, but the bigger story is how few people will actually benefit from it.

The standard deduction is now higher than ever. Most taxpayers do not itemize anymore. When the standard deduction jumped a few years ago, the number of people who itemized went from around 30% to about 9%. That is a huge drop.

Even though the SALT deduction cap is getting a temporary boost from $10,000 to over $40,000 for a few years, most people will never use it. The standard deduction is just too high.

So if you have been told to watch out for the SALT cap, know that for most people it really does not matter anymore. Unless your itemized deductions are higher than the standard deduction, you will not see an extra benefit.

Most people will still take the standard deduction. Only a small group will actually see a bigger tax break because of the SALT cap change.

Does the higher standard deduction make your taxes easier, or are you hoping to itemize anyway?

There is a new tax deduction for personal vehicle loan interest, but it comes with a lot of fine print.

For tax years 2025 through 2028, you can deduct up to $10,000 of interest paid on a loan for a new personal vehicle. Used cars do not qualify. The vehicle has to be bought new, and the loan must start after December 31, 2024.

This deduction is only for regular drivers, not for business or commercial vehicles. The vehicle must be under 14,000 pounds, so think cars, SUVs, minivans, pickups, or motorcycles. Also, the car has to be assembled in the U.S.

This deduction starts to phase out if your modified adjusted gross income is over $100,000 for single filers or $200,000 for married filers.

If you fit the rules, this can help, but it will not apply to everyone out shopping for a new ride.

Is this enough to push you to buy a new car, or will you sit this out?

Most S-Corp owners set their salaries wrong.

It’s not just about saving on payroll taxes. Your salary decision could wipe out your QBI deduction if you’re not careful.

Here’s what no one tells you:

The Qualified Business Income (QBI) deduction is one of the biggest tax breaks for business owners.

But if you pay yourself too much or sometimes too little, you might lose a chunk of that deduction.

It’s a weird balancing act:
Low salary? The IRS may call you out and you might not be able to contribute much to retirement.
High salary? You’re paying more payroll tax and can torpedo your QBI deduction once you cross certain income thresholds (about $200k single, $400k married).

The QBI phaseout rules mean your salary isn’t just a compliance box. It’s a lever that can save you or cost you real money.

So what should you actually do?

Model different scenarios before you set your pay.
Sometimes bumping salary up can actually get back some QBI.
Sometimes you keep it at the floor.
And sometimes, you need to pay more and take your lumps.

Don’t just copy what your friend does or what your payroll provider recommends.

If your CPA isn’t talking QBI with you, they’re missing the big picture.

How do you figure salary for your S-Corp? I’m curious who’s actually running the numbers.

Is your CPA quietly costing you $60,000 a year?

Not in fees. 
In actual taxes paid.

I see it all the time with online business owners running S-Corps.
They trust their CPA to “do the taxes” but nobody’s actually doing the planning.

Let’s be blunt: 
If your only experience with tax season is a frantic email in March, you’re probably overpaying.

Here’s what I do differently for my clients:

→ We model your QBI deduction before we set your salary. 
No “one size fits all” here. 
Real math, real savings.

→ We spot where phaseouts are sucking cash out of your pocket.
Most people have no idea this is even happening.

→ We actually check if your business qualifies as an SSTB.
If it does? We get strategic. If it doesn’t? Even better.

→ Sometimes, contractors become W-2s.
That can slash your tax bill if you do it right.

→ We don’t just “pick a number” for salary.
We optimize for deductions and for retirement.

→ “Reasonable compensation”?
We analyze it under IRS standards, not just gut feelings.

→ The tax code changes constantly.
We actually keep up. (Wild concept, right?)

Here’s the real difference:
Most CPAs are playing defense.
I play offense.

They file returns.
I find money.

You deserve someone who does more than check boxes.

Has your CPA ever even modeled your QBI deduction?

If not, maybe it’s time you got a new one.

What’s the wildest thing your CPA ever missed?

Does spending less than half the year in your home state let you avoid state income taxes?

Short answer: no. And California makes sure you know it.

Let’s say you’re a digital nomad. You spend three months in Los Angeles, then ten months touring or working in other states. Maybe you never spend more than a few weeks in any single state besides California.

California doesn’t care about the “half the year” idea. If you spend the most time in their state, even if it’s just three months, they call you a resident for income tax purposes.

So moving around most of the year does not free you from your home state’s tax rules.

I see people try to game this system all the time. States are way ahead of you.

Have you ever tried to relocate for tax reasons?

Ever seen those “gurus” telling you to use a Nevada C-Corp to dodge your home state taxes?

It sounds clever. Skip your own state, pay yourself through a Nevada C-Corp, and avoid state income tax. That’s the idea they are selling.

But here’s the truth. This is risky, flimsy, and barely legal, if it is legal at all.

Here’s how the scheme works: you set up a C-Corp in a state like Nevada with no state income tax. Your main business suddenly starts paying big “commissions” to your Nevada C-Corp. As long as you don’t take the money out personally, you think you get to keep those profits tax-free.

But this almost never works out in real life.

States and the IRS are smart. If they see your C-Corp is just a shell with no real purpose except draining profits out of your business, they tear it apart. They reclassify those commissions as personal income or distributions and send you a tax bill (plus penalties). People have even gone to prison for these kinds of tricks.

Most of these crafty-sounding setups collapse as soon as someone takes a good look. If a strategy depends on everyone looking the other way, it’s not a strategy. It’s a risk.

If it sounds too good to be true with taxes, it usually is.

Ever heard one of these fancy schemes?

Charitable giving rules are changing, and it is worth knowing what is new.

Starting in 2026, taxpayers can take a small deduction for charitable donations without itemizing. The cap is $1,000 for single filers and $2,000 for those married filing jointly. Donations to donor-advised funds are not included, and the limit does not go up with inflation. Still, it is more than many people could claim before.

But it is not all good news. For those who do itemize, there is now a floor. The first 0.5% of your adjusted gross income in donations will not count for a deduction. For example, if your AGI is $100,000, the first $500 in giving will not be deductible. You only get to deduct what you give above that number.

Corporations face a 1% floor for donations. For example, if a company makes $10 million, the first $100,000 of donations will not be deductible. That is a big number, and it could make companies think twice about how much they give.

The main takeaway? More people can get a modest deduction without itemizing, but it will be harder to deduct all your charitable giving if you itemize and do not give a larger amount.

Is this something that will change the way you handle charitable gifts?

The estate tax exemption is now higher and it is here to stay.

Starting in 2026, the exemption jumps to $15 million per person, and it will go up with inflation after that. This means most families will never have to worry about the federal estate tax.

Back in 2001, the exemption was only $675,000 and over 100,000 estate tax returns were filed. Now, with a $15 million limit, the number of people who pay this tax is very small. In 2022, fewer than 10,000 estate tax returns were filed.

If you are not in that top group, this change will not affect you. The estate tax used to be a big deal for regular families, but now it is mostly a concern for the very wealthy.

For most people, other things matter more, like making sure your will is clear and your assets are set up the way you want.

Does this higher exemption change your planning at all, or are you more focused on other parts of your financial plan?

Crypto investors got a break that is staying in place, at least for now.

Some versions of the new tax bill would have changed the rules for selling crypto at a loss. Many thought crypto would be treated like stocks, where if you sell at a loss and buy right back in, you cannot claim the loss on your taxes.

But that did not happen. The wash sale rule still does not apply to crypto. This means you can sell your crypto at a loss, buy it back right away, and still claim the loss on your taxes.

For anyone trading digital assets, this can be a useful tool for managing your tax bill.

This rule could always change in the future, but for now, crypto gets a big tax break that other types of investments do not.

Are you using this to your advantage, or do you think the rules should be the same for everything?

A lot of clean energy and electric vehicle tax breaks are gone or are about to expire.

The credit for buying a new or used electric vehicle ended for purchases made after September 30, 2025. Other incentives are still around for now, but not for long. The credit for adding solar panels or other residential clean energy improvements ends after December 31, 2025.

There are a few other credits for things like energy-efficient windows, doors, and home charging stations that are also being phased out for work completed after the end of 2025 or in mid-2026, depending on the credit.

If you missed the EV deadline, that incentive is no longer available. For other upgrades, the window to use these credits is closing soon. After those dates, your costs will go up since the incentives go away.

This is a big shift. These credits have been a major selling point for a lot of buyers and homeowners.

Did you take advantage of any of these credits, or does this change your plans for future improvements?

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