A practical framework for turning tax confusion into advisory opportunities.
Highlights
- Self-employment tax creates surprise cash flow crises for service providers transitioning from employee status.
- OBBBA permanently extends QBI deductions but doesn’t reduce the 15.3% self-employment tax burden.
- S-corporation election can save $5,000+ annually for businesses earning over $60,000 profit consistently.
A service provider runs the numbers in November: gross revenue $180,000, expenses $80,000, net profit $100,000. They think, “I made $100K, so I’ll owe income taxes on that.”
But then they discover they also owe self-employment (SE) tax, which they’ve never really understood. Frustration sets in: “Why am I being taxed on money I didn’t take home?”
What they believed: “Taxes = income tax on profit….
