Client Background
A successful real estate agent earning income from commissions, rental properties, and real estate consulting needed tax advising to optimize deductions and minimize their tax liability. The client hired Development Theory to do tax advising for a real estate professional.
The Challenge
Multiple Income Sources: The agent had commission-based income, rental income, and consulting fees, making tax planning complex.
Missed Real Estate Deductions: Business-related expenses like marketing, mileage, and home office use were not properly deducted.
Self-Employment Tax Burden: Without a tax strategy, the agent was paying excessive self-employment taxes.
Lack of Retirement Planning for Tax Savings: The agent wasn’t leveraging retirement contributions to reduce taxable income.
Our Approach
Entity Structuring for Tax Efficiency: Transitioned the agent to an S Corporation, reducing self-employment tax.
Expense Deduction Optimization: Ensured all eligible business expenses were properly categorized and deducted.
Rental Property Depreciation Review: Applied accelerated depreciation methods to minimize taxable rental income.
Retirement Contribution Strategy: Implemented a SEP-IRA plan, reducing taxable income while building retirement savings.
Quarterly Tax Planning & Projections: Developed quarterly tax estimates to prevent underpayment penalties.
The Solution
Converted business structure to an S Corp, reducing tax liability.
Identified over $30,000 in missed deductions, increasing cash flow.
Optimized rental property depreciation, lowering reported income.
Implemented a retirement plan, allowing for pre-tax contributions.
Results & Impact
Saved over $12,000 in taxes in the first year.
Self-employment tax reduced by 40%, thanks to the S Corp election.
Cash flow improved, making future investments easier.
Tax filing process streamlined, reducing IRS audit risk.
Client Feedback
"I had no idea I was overpaying so much in taxes! Now, I have a clear plan to save money while growing my business."
Development Theory Can Help Business Owners Like You
Are you paying more in taxes than you need to? Smart tax strategies can save you thousands each year while keeping you compliant. At Development Theory, our Tax Advising services help small business owners identify deductions, structure their businesses for tax efficiency, and create proactive tax plans that reduce liability and increase cash flow. Whether you're planning for growth, preparing for an exit, or just looking to keep more of what you earn, we can help you navigate complex tax laws with confidence.
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