Local SEO Guide

2018 Tax Planning for SEO Agencies & Consultants

I have seen a lot of chatter online lately between SEOs about how the new U.S. tax laws will affect them. I have been having an ongoing conversation about this issue with our long-time accountant, Ed Borine, and I figured it might be of interest to share what he has been advising us. It’s all about optimization right?

Warning, this post should not be construed as actual tax advice. This is purely clickbait entertainment. If you want actual tax advice, consult with a tax professional.


TL;DR How To Maximize Your Pass Through Income Tax Deduction

  1. LLCs should consider shifting to a subchapter S corporation, sole proprietorship or partnership
  2. If you have employees, shift as much expenses to W2 wages as possible
  3. Reduce your salary to minimize salary income and maximize profits
  4. Sole proprietors should consider setting up a tax shelter vehicle
  5. Hire a good accountant

The focus on my discussion with Ed has been how to take advantage of the tax credits for Qualified Business Income. I am going to start with some exposition and then move on to how we can milk this thing for all it’s worth.

Filing Status
Deduction Dimishes After
Deduction Credit Ends At
Single
$157,000
$207,500
Married/Joint Filing
$315,000
$415,000

To put it in English, a single person having at least $157,000 in taxable income will begin to lose the  deduction at the rate of 2% for every dollar that their taxable income exceeds $157,500. Once they make over $207,500 in taxable income, the deduction is gone. If you are married, you lose the deduction at the rate of 1% for every dollar that your taxable income exceeds $315,000. The main concept you should get is that you are in effect penalized for having too much taxable income, so if you make over the top threshold, you will want to engineer your taxable income to max out the credit.

Please note that the Sec. 199A deduction is applied to the lesser of your qualified business income or your taxable income.


This being the case, here are some options you’ll want to talk over with your accountant. If your qualified income is going to exceed the top threshold:

If you’ve made it this far, you see why Ed calls this bill the “Full Employment for Accountants Act of 2017”. So do yourself a favor and get on your accountant’s calendar asap. He or she is going to be pretty busy.

And if you need a great accountant, I’d be remiss if I did not recommend Ed. Here’s his info:

Ed Borine, MS Taxation
E.R. Borine Financial Management
628 Tenth St., Santa Monica, CA 90402
eborine-at-aol.com

And if you have any questions, pop them in the comments and maybe I can get Ed to answer a few. Happy tax optimizing!