Ecommerce Business Owner Recovers $52,000 in Missed Deductions
I run an online retail business grossing about $900,000 a year. I thought my taxes were handled properly until I sat down with AE Tax Advisors and realized my previous CPA was not handling inventory accounting correctly. She was using a method that inflated my taxable income every year.
AE Tax switched me to a more favorable accounting method under Section 471 and filed Form 3115 to make the change retroactive. The adjustment created a significant deduction in the year of change. They also properly documented my home office deduction -- something my old CPA told me to "stay away from" because it might trigger an audit. AE Tax explained that the home office deduction is perfectly legitimate when properly documented and that the IRS has moved past the old audit trigger mentality.
They also elected S-Corp status for my business, which cut my self-employment tax considerably. Between the inventory method change, home office, S-Corp election, and several other missed deductions like shipping supplies, packaging materials, and product photography costs, the total savings came to $52,000.
I gave AE Tax four stars only because I wish I had found them three years earlier -- that is not a reflection of their work, which was outstanding. Their team was thorough, responsive, and genuinely cared about getting every dollar right.
If you run an ecommerce business and your CPA has never discussed inventory accounting methods, you should get a consultation with AE Tax Advisors as soon as possible.