Who We Serve
Consultants & Professionals
High income, almost no balance sheet, and none of the shelter a capital-intensive business produces by accident.
Independent consultants, agency principals, partners, and licensed professionals convert time into income with very little in between. The effective rates are among the highest we see, and the infrastructure behind them is usually the thinnest.
The position
What this situation actually looks like.
A low-capex business is an excellent thing to own and a difficult thing to plan around. There is very little capital tied up, margins can be exceptional, and the income is almost entirely a function of the principal's time. The same properties that make it profitable also mean it generates almost nothing in the way of depreciation, basis, or structural shelter.
A capital-intensive business produces tax attributes as a by-product of operating. A consultancy produces none. Everything available has to be built deliberately, and almost all of it has to be in place before the year closes.
The other half of the problem is that there is no institution behind you. No benefits department, no plan sponsor, no risk manager. Whatever has been set up, you set up, usually at the beginning, usually as a default, and usually without modeling the alternative.
Recognition
The problems you already know about.
If several of these are familiar, the situation is well within what this practice was built for.
No assets, therefore no shelter
Your business owns laptops and goodwill. There is no depreciable base, no cost segregation study to run, and none of the first-year treatment available to a business that has to buy things in order to operate.
Self-employment tax on income that could be characterized differently
Operating as a sole proprietor or a default LLC exposes the whole of your net income to self-employment tax. Whether an election would change that, and at what point it stops being worth the complexity, is a calculation most people in this position have never had run.
Contribution capacity going unused every year
The retirement architecture available to a high-earning self-employed professional is considerably larger than a SEP, particularly past forty-five. It requires design and an actuary, and the capacity does not carry forward. Every year it is not used, it is gone.
Income that varies enough to punish a flat approach
A very good year followed by an ordinary one is taxed worse than two even years with the same total. Without smoothing, you pay top rates in the peak and cannot recover the difference in the trough.
Estimates that are a guess
Quarterly payments based on last year's number, adjusted by feel. Either you are lending the Treasury money interest-free, or you are accruing penalties, and usually you have no idea which.
Professional liability against personal assets
For a licensed professional, the exposure created by the work and the assets built from the work frequently sit on the same balance sheet, separated by an insurance policy and not much else.
Less obvious
And the ones that rarely get named.
These surface in the diagnostic rather than in the first conversation, and they are usually the more consequential half.
You are the entire enterprise value
A business that cannot operate without you is difficult to sell and produces nothing when you stop. Whatever is going to fund the years after the work has to be accumulated outside the business, on purpose, while the income is still arriving.
Your best year is a planning event, not just a good year
An exceptional year is the year the most is available and the year it is least likely to be used, because you are busy having the exceptional year. The window closes on December 31.
Nobody is coordinating your advisers
A preparer, possibly a bookkeeper, maybe a financial adviser. Each competent, none responsible for the whole, and the gaps between them are where the money goes.
How we work here
The sequence, applied to consultants & professionals.
The same three stages, in the same order, framed against the situation you are actually in.
- 01
Save
Entity election and compensation structure designed so income is characterized efficiently, with the tax treatment of any outside assets you choose to own modeled against your actual income.
Save in detail - 02
Protect
Professional and operating exposure separated from personal assets, with the structure funded while nothing is pending.
Protect in detail - 03
Grow
Contribution and deferral capacity designed and used each year, and the tax side of building wealth outside a business that depends on you planned in advance.
Grow in detail
Common triggers
When people tend to call.
- Income that varies enough year to year that a flat approach leaves money on the table
- Self-employment tax on earnings that could be characterized differently
- No employer retirement plan, and contribution capacity going unused each year
- Operating as a sole proprietor or a default LLC because nobody modeled the alternative
- A business with no depreciable assets and therefore no natural shelter
- Quarterly estimates that are a guess rather than a calculation
- Professional liability sitting directly against personal assets
Further reading
Written for this situation.
Three States That Will Not Follow
California, Illinois, and New Jersey each break the central federal planning move, and they break it in three different ways. Only one of the three is a timing problem.
The Cost of Having No Balance Sheet
A capital-intensive business produces tax attributes as a by-product of operating. A consultancy produces none, and everything available has to be built on purpose.
Capacity Unused
The retirement architecture available to a high-earning self-employed professional is considerably larger than most of them use. It requires design, an actuary, and a decision before year end.
Begin
Bring us the situation you are actually in.
Thirty confidential minutes with a principal. We will tell you where the real levers are, including when the answer is that you do not need us yet.
Engagements typically begin at $2M+ of annual income, or a comparable taxable event.