HSA for sole proprietor

[El TD]

Hello mustachians,
Here's the situation: I'm looking to start socking away money into an HSA, now that we're maxing out our 401(k) and IRA.
My wife runs her own business as a sole proprietor. Her business pays for our health insurance, which is an HSA-eligible HDHP. I talked with one HSA provider (where we already have an account from a previous employer) and they told me that the contributions could be deducted from our personal taxes, but wouldn't count as business expenses.
Is this true? Is there a way to do it with a SP so that it can be a business deduction?
How much does deducting on the personal side versus business side matter for our overall taxes? She worked a lot this year and will have made an unusually large profit, ~200K. (On a sidenote, any suggestions for how to minimize the tax burden for the business for this year are welcome - I haven't combed through the forums for an answer to that as I did for this HSA question.)

thanks!

[bacchi]

The HSA provider is correct. HSA contributions will pay the full FICA (really, SECA) tax and it's on the first page of the 1040.

Your wife can establish a solo 401k through any of the major brokerages. That's the best way to decrease taxes for the self-employed.

[seattlecyclone]

Not sure about the best way to have the business pay for the HSA directly. The main benefit I'd see tax-wise if you were able to do it is that the business deduction would reduce the amount of self-employment tax you might owe. If you're clearing $200k as a sole proprietor: a) you're probably into the zone where the self-employment tax rate isn't very high because you've passed the social security tax limit and you're only paying the Medicare bit, and b) you might benefit from looking into whether this business might make more sense to organize as an S corp; talk to an expert about that. A drawback of paying for it through the business might be that you have a lower QBI deduction compared to if you pay for it on your personal balance sheet.

[El TD]

Thank you for those answers. Very helpful. We already have a solo 401(k), so I guess we'll stick with that as to tier tax-advanced account. The HSA will help on the personal side and that seems to be the best we can do with that.

[sonofsven]

It's hard to avoid SE tax. You can make less money by working less (my choice), increase your business expenses (this is why so many construction contractors buy new trucks every three years), or form an s-corp.