Taxes · Consulting

How can my consultancy save on taxes?

Erick Calder Solutions Architect at Union Bank/MUFG

October 24th, 2016

I run a small one-man shop doing software consulting for large companies.  I currently write off my internet costs, some amount of transportation, travel and entertainment and other minor expenditures.  the business costs are really small so the tax burden is very heavy.  I'm looking for suggestions on how I can lighten my liability.

thanks in advance

Lorne [LION] Seeking new clients - Practical Solutions in Action

October 24th, 2016

You need to talk to a tax account that has an established practice in small business accounting and knows the city, state, and IRS tax laws so they can maximize your take-home.

Taking advice from anyone other than a qualified and experienced CA for this could lead you to "audit city".  A bad place to be in either the US or Canada ;)).

Chris Maeda President & CEO, Brick Street Software, Inc.

October 24th, 2016

Talk to your tax advisor.  The low hanging fruit is:

1. Set up a self-employed 401k. This allows you to defer up to $50k per year into your retirement fund.

2. If you are able, move to Nevada so that you don't have to pay California income tax.


Thomas Hewitt Independent Consultant

October 24th, 2016

Erick, The most obvious one not on your list is home office expense.  Also, publications and subscriptions. Home office expense is a freebie since there is minimal incremental expense from working at home. Time to buy a new laptop, phone or printer?  You can deduct the full amount, not depreciate them. Tom--Thomas R Hewitt LLC  281.799.0658 hewitt3908@yahoo.com

Rob G

October 24th, 2016

chatting with a tax accountant is a good idea certainly.  I am not an accountant. get a referral or 2 and check references - i had a bad experience with a CPA who presented at a startup meetup.  Apparently the CPA exam doesn't address common sense.  Also, take a look into IRS section 179 deductions. 

Erick Calder Solutions Architect at Union Bank/MUFG

October 24th, 2016

Lorne: thanks, I've talked to many.  they're quite useless.

Chris: yes, I have a self-directed IRA that shields some of the income but not nearly enough, and yes, I did move to Nevada for that reason though the presence rules make those kinds of arguments hard to stick

Thomas: I do take a home office deduction

Rob: CPAs have a standard bag of tricks that work minimally well for more traditional businesses

All: in my case I'm looking for out-of-the-box ideas



Chris Maeda President & CEO, Brick Street Software, Inc.

October 24th, 2016

Erick - pm me or connect on linkedin.