Not tracking deductible expenses properly as a consultant

Home office deduction, professional development, travel, technology, professional memberships, and health insurance premiums (for S-corp owners) are all deductible. The IRS publishes clear guidance on each. Most consultants leave $5-15K in deductions on the table annually simply because they don't track expenses systematically.

📊 Industry Insights

You advise companies on strategy. Your own financial structure is a single-member LLC.

Published IRS data shows that consultants netting over $150K as an LLC overpay self-employment tax by $20K or more every year. You optimize everyone else's operations. Time to optimize your own.

$20-40K

Annual self-employment tax overpayment for consultants above $150K net

$66K+

Annual retirement contribution possible with Solo 401(k) — IRS limits for 2026

60%

Of consulting firms have no written operating agreement — per industry surveys

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Based on typical client scenarios. Individual results vary depending on your specific situation.

Common issues

Where management consulting firms typically have gaps.

Patterns we see most often in this industry.

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You Pay More Self-Employment Tax Than Your Clients' Employees

A consultant netting $250K as an LLC pays roughly $35K in self-employment tax. The same income through an S-corp with reasonable compensation pays roughly $18K. That's $17K a year — every year — because of entity structure alone. The IRS publishes guidance on this. It's not aggressive planning. It's using the structure the tax code was designed for.

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Your Professional Liability Coverage Has Gaps You've Never Checked

Standard E&O policies for consultants often exclude specific deliverable types — data breaches from your recommendations, regulatory penalties from your advice, intellectual property disputes. The Insurance Information Institute publishes data showing that professional liability claims in consulting have increased 40% since 2020. When was the last time you actually read your policy?

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You're Maxing a SEP-IRA When a Solo 401(k) Lets You Save More

A SEP-IRA limits contributions to 25% of compensation. A Solo 401(k) allows both employee deferrals ($23K, or $30.5K if over 50) AND employer contributions up to 25% — for a total of $66K+ per year in 2026. These are IRS-published limits. The Solo 401(k) also allows Roth contributions and loans against the balance. Most consultants have the wrong retirement vehicle.

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Common mistakes

Frequent missteps in management consulting.

Running a consulting business as an LLC past $80K net income +

The S-corp election is the most common tax optimization for service businesses, per IRS filing data. It splits income between salary (subject to FICA) and distributions (not subject to FICA). At $200K net, this saves roughly $25K per year. The IRS requires 'reasonable compensation' — typically 40-60% of net for professional services.

Using a SEP-IRA instead of a Solo 401(k) +

A Solo 401(k) allows both employee and employer contributions — up to $66K+ per year for those under 50 (2026 IRS limits). A SEP-IRA caps at 25% of compensation. If you're a solo consultant or small partnership, the Solo 401(k) almost always allows you to shelter more income. Roth contributions and loan provisions are additional benefits.

No written operating agreement between consulting partners +

An operating agreement defines ownership, profit distribution, exit terms, disability provisions, and dispute resolution. Without one, your state's default LLC rules govern — and those rules rarely match what partners actually want. The cost of drafting an agreement is trivial compared to the cost of dissolving a partnership without one.

Typical opportunities

Common areas of recovery.

Opportunities we typically identify for management consulting firms.

S-Corp Election

$15-40K/year

Eliminates unnecessary self-employment tax on income above reasonable compensation

Solo 401(k) vs. SEP-IRA

$66K+/year sheltered

Higher contribution limits let you shelter more income — 2026 IRS limits

Professional Liability Audit

Gap elimination

Ensuring your E&O actually covers the work you do — not what you did five years ago

Expense Optimization

$5-15K/year

Proper tracking and deduction of home office, travel, tech, and professional costs

Real-World Example

What a Foundation Review actually looks like.

An anonymized engagement from our work with management consulting businesses.

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Management Consulting Firm

$2.8M annual revenue

A three-person consulting firm — one founder and two senior partners with verbal equity arrangements — had no formal operating agreement, no life or disability insurance on any partner, and a SEP-IRA that was costing them compared to better options. The founder assumed their E&O policy covered everything they did.

What the Foundation Review found

No life or disability insurance on any of the three principals — a death or disability would trigger a chaotic dissolution with no buyout mechanism and no income replacement for the affected family
Verbal equity arrangements with two senior partners meant no funded succession plan — and no insurance to back it up
SEP-IRA was limiting retirement contributions: a Solo 401(k) would allow an additional $40K+ per year per partner in tax-deferred savings
E&O policy excluded data analytics work and cyber-related claims — the firm's fastest-growing service lines

Result

The Foundation Review formalized the partnership with a buy-sell agreement funded by cross-purchase life and disability insurance (placed through Ash Brokerage), upgraded each partner's retirement plan to a Solo 401(k), and requoted E&O to cover their actual service lines. Total new coverage: $3.6M in life insurance and disability protection across three principals.

Details anonymized and modified. Individual results vary — your Foundation Review will be specific to your situation.

Why Good Deals

An integrated alternative.

One firm. Investments, tax, insurance, business advisory.

Good Deals consolidates investment management, tax strategy, insurance planning, and business advisory into one CFA-led practice. Operator background spans dozens of companies and many industries.

For your industry specifically: we coordinate with your existing CPA and attorney rather than replacing them.

CFA-led investment analysis and portfolio management.
Operator background across multiple industries.
Registered fiduciary — legally obligated to act in your interest.
Investments at Altruist; insurance through BackNine when an audit identifies a need.
90-day money-back on every V-CFO engagement.
Austin, TX.

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A 60-minute working session focused on management consulting. No cost.