Management Consultant Saves $79,000 with Solo 401k and QBI Strategy
As a solo management consultant earning high six figures, I was maxing out a SEP-IRA and thought I was doing everything right. AE Tax Advisors showed me I was leaving significant money on the table.
First, they restructured my consulting practice as an S-Corp, immediately reducing my self-employment tax burden. Then they replaced my SEP-IRA with a Solo 401k that includes a mega backdoor Roth component. The difference in contribution limits and flexibility was substantial -- I am now sheltering far more income with a mix of pre-tax and Roth contributions.
The QBI deduction was another area where my old CPA was leaving money behind. As a consulting firm, the QBI rules are tricky because of the specified service trade or business limitations above certain income thresholds. AE Tax structured my compensation specifically to keep my taxable income in the range where QBI is partially available, which required careful calibration of my W-2 salary.
Total savings: $79,000 in year one. That number will recur and potentially grow as my income increases.
What I appreciated most was the team's depth of knowledge. They did not give me generic advice -- they understood the specific rules for professional services firms and designed a strategy around my situation. Every recommendation came with citations to the relevant tax code sections and clear explanations.
For any consultant or professional services firm owner, the combination of S-Corp, Solo 401k, and QBI optimization is powerful. AE Tax Advisors executes it flawlessly.