Tax and bookkeeping built for professional service providers

Self-employment tax on service income

Professional service providers operating as sole proprietors or single-member LLCs pay 15.3% self-employment tax on all net income. This is on top of federal and New York income tax. An S-corp election is often the single most impactful tax move available.

Irregular income and cash flow planning

Commission-based and project-based income is lumpy. Real estate agents may earn most of their income in Q2 and Q4. Consultants may have feast-or-famine months. Tax planning and quarterly estimated payments need to account for income variability.

Home office and business expense deductions

Professional service providers often work from home or a small office. The home office deduction, vehicle use, professional development, software subscriptions, and business meals are all deductible — but documentation requirements are strict.

Qualified Business Income (QBI) deduction

The 20% QBI deduction under Section 199A can significantly reduce taxable income for pass-through businesses — but it phases out for high earners in certain service industries. Understanding whether you qualify and how to maximize it requires careful planning.

Real estate agent commission income and expenses

Real estate agents receive 1099-NEC income and pay their own expenses — MLS fees, marketing, E&O insurance, desk fees, and vehicle costs. These are all deductible, but they need to be tracked and categorized correctly throughout the year.

Retirement planning for high earners

Professional service providers are often high earners with no employer retirement plan. A solo 401(k), SEP-IRA, or defined benefit plan can shelter significant income — but the right choice depends on income level, age, and whether you have employees.

Multi-state income for consultants

Consultants and advisors who work with clients in multiple states may owe income tax in those states. New York has aggressive source-income rules — income earned for work performed in New York is taxable in New York even if you live elsewhere.

Entity structure as income grows

Many professional service providers start as sole proprietors. As income grows, the right entity structure — LLC, S-corp, or professional corporation — depends on income level, liability exposure, and long-term business plans.

When:

Net income exceeds $60,000

Evaluate S-corp election to reduce self-employment tax

When:

Income exceeds $182,000 (single) or $364,000 (married)

Review QBI deduction phase-out and plan around it

When:

Profitable year with cash available

Maximize retirement contributions — solo 401(k) allows up to $69,000 in 2024

When:

Working with clients in multiple states

Review multi-state income sourcing and filing obligations

When:

Hiring your first employee or contractor

Determine correct classification and set up payroll or 1099 process

When:

Planning to sell your practice or book of business

Review entity structure — sale treatment varies significantly by entity type