Saved this year
$528,750
Strategy one
Own the insurance company
Right now ACS pays premiums to insurance companies and never sees that money again. A captive is an insurance company you own instead. It covers the things regular policies won't — a canceled contract, a supplier that fails, the loss of a key employee, a dispute that shuts down a job. Premiums are a deductible business expense, and whatever isn't paid out in claims stays in a company the owners control.
Your numbers
Of every $1,000 ACS earns today
$423 to tax
This is what leaves the business on every extra $1,000 of profit, before you've spent a dime of it.
What we're doing about it
$423 redirected
Sending those same dollars somewhere you own instead of somewhere you don't.
Move the slider
Tax you don't pay this year
$317,250
Because the premium is deductible
Insurance coverage you get
$1,500,000
Twice the premium, in real policy limits
What stays in the captive
$661,500
Each year, after claims and fees
ACS pays a premium→
ACS's own captive→
Claims, if any
+
The rest is yours
Over ten years
After a $6,000 annual fee and a 6% retained liability premium.
Tax savings, invested
Money in the captive
Both together
Tax savings, invested
$4.6M
Ten years of savings, put to work
Money in the captive
$9.58M
Yours, through dividends or loans
Ten-year total
$14.18M
Both of the above, combined
In plain English
You already carry risk that no insurance company will cover. Today you absorb those losses out of pocket, with money you've already paid tax on. A captive lets you set that money aside before tax, in a company you own, and use it when something goes wrong.
Take the loss of a key employee — the estimator who knows every bid, or the operations lead who holds the supplier relationships. If they're hurt, get sick, or walk out the door, ACS absorbs the cost of recruiting, the overtime covering the gap, and the jobs that slip while someone new gets up to speed. No commercial policy pays for that. A captive can.
The rules are real and we follow them: the captive has to work like actual insurance — real policies, real underwriting, real claims — and it shares risk with other companies in a pool. That's what makes it legitimate rather than a gimmick.
When claims stay low, the money piles up. You get at it through dividends or loans — so if the chance comes to buy another business, or retire earlier than planned, it's there.
Strategy two
Pay yourself later, not now
A deferred compensation plan lets owners and key people take part of their pay in a future year instead of this one. You skip the tax now, the full amount gets invested, and you're taxed only when the money is actually paid out — on a schedule you pick in advance, ideally in a year or years when your income is lower.
Move the slider
Tax you don't pay this year
$211,500
Deferred until the money is paid out
Amount actually invested
$500,000
The whole dollar, not what's left after tax
Balance after ten years
$7.24M
Growing untouched at your chosen rate
No required withdrawals at 73
No contribution limit
You pick the payout years
Helps keep key people
In plain English
It's a written agreement between ACS and you: instead of taking some of this year's pay now — and losing more than 40 cents of every dollar to tax — you agree to take it later. In the meantime the whole amount is invested and grows.
Because it sits outside 401(k) rules, there's no cap on how much you can put in and nobody forces money out at 73. You choose the payout years up front.
Two honest trade-offs. You have to lock in the payout schedule in advance and it's hard to change later. And until it's paid, the money is a promise from the company rather than cash in your name — so it depends on ACS being healthy, which for an owner is usually a bet you're already making.
Both together
What it adds up to
Both strategies side by side — this year, and ten years out. Every number here follows the sliders on the first two pages.
Ten-year total
$24.49M
Tax savings, money in the captive, and deferred pay combined — broken out below.
This year alone: $528,750 recovered instead of paid in tax.
Ten years of tax savings
$7.66M
Both strategies, invested as you go
Money in the captive
$9.58M
Yours, through dividends or loans
Deferred pay
$7.24M
Taxed as ordinary income when paid out
Tax savings, invested
Money in the captive
Deferred pay
The three layers stack, so the top of the shaded area is the ten-year total shown above.
What waiting costs
A year without these is a year of savings that never happened — and never grows. Against the same ten-year window:
Wait 1 year
−$1.06M
never recovered
Wait 3 years
−$2.94M
never recovered
Wait 5 years
−$4.56M
never recovered
The path forward
What I'd actually do
Four short points on how this works from here.
01
Don't change what's already working
Keep your CPA and your current advisors. They know your books, your filings, and your history. That's an asset and nothing here replaces it.
I work alongside your existing team, on the narrow set of strategies that fall outside everyday accounting, personal financial advising, and compliance work.
02
Start with these two
From what I know about ACS so far, the captive and the deferred comp plan do the most good first. They handle real uninsured risk and a real tax bill at the same time.
A closer look at your financials, contracts, and ownership plans will sharpen the numbers. That's the first working session.
03
Areas we can look at later
These two are the start, not the whole list. As I learn more about the business, there are broader areas worth looking at together when the timing is right:
Succession & estate planning
Charitable structuring
Retirement plan design
Executive benefits & retention
Entity & ownership structure
Real estate & asset strategies
04
The ask
None of this is new — big companies have done it for decades. What's new is that it's now practical for a company your size, and most businesses like yours never have anyone whose job it is to bring it up.
So here's the ask: 15–30 minutes, twice a year or as needed. We look at what's changed in the tax code and in your business, and decide together if anything is worth doing.
Let's put the first 30 minutes on the calendar
These numbers are an illustration — the real design depends on your revenue, your risks, and what the owners want long term. The next step is a working session where we size this properly. Bring your CPA. We like it when the CPA comes.
Important disclosures. All figures are for illustrative purposes only and do not represent actual outcomes. This illustration does not provide legal, tax, insurance regulatory, or investment advice — consult your independent advisors before implementing.
Calculations apply the selected federal marginal bracket plus Idaho's 5.3% flat individual rate additively, and ignore deductions, credits, SALT interactions, payroll taxes, entity-level differences, and market risk. The selected growth rate is an assumption, not a guarantee. The 15%-of-revenue premium guideline is a planning rule of thumb; actual premiums must be independently underwritten and actuarially supported.
Tax deferral does not mean tax-free. Captive reserves are taxed on investment income and dividends are taxable at qualified rates; deferred compensation distributions are taxed as ordinary income when received. Captive figures are net of an assumed $6,000 annual administration fee and a 6% retained liability premium deducted from each year's premium; actual fees vary by administrator, funding level, and program design. Captive premiums are subject to the annual 831(b) election limit ($2,900,000 for taxable years beginning in 2026, indexed annually) and must satisfy the four-part test: risk transfer, risk distribution, fortuitous risk, and the ordinary principles of insurance. Actual claims experience will vary, and participation in risk pools means sharing in others' claims. Tax savings should never be the primary purpose of a captive; the IRS may deny deductions for transactions primarily motivated by tax benefits (see Notice 2016-66). Deferred compensation plans must comply with IRC §409A; deferred amounts remain subject to the company's general creditors, and while no required minimum distributions apply, distribution elections are largely irrevocable once made.
Prepared exclusively for American Construction Supply · Confidential — not for distribution