Skip to content
KG
KG Tax & Consulting
Industry

Tax & Accounting for Consultants & Freelancers

Solo consultants usually overpay self-employment tax for years before someone runs the S-corp math with them. The rest of the picture (quarterly estimates, home office, retirement plans, multi-state clients) rewards the same thing: treating the practice like a business instead of a hobby with invoices.

Katie Gorles
Written by
Katie Gorles
Updated July 6, 2026

The S-corp break-even

Schedule C self-employment income pays 15.3% SE tax on every dollar. S-corp owner-employees pay payroll tax only on reasonable salary, with distributions taking the remainder. Break-even is typically around $45,000 to $60,000 in net income. Below that line, payroll processing and an extra tax return eat the savings; above it, the election usually wins every year it stays in place.

Quarterly estimates without the guesswork

Consulting income has no withholding, so the IRS expects four estimated payments a year. The safe-harbor rules let you base payments on last year's tax and stop worrying about mid-year swings. Skipping estimates doesn't save money; it converts the same tax bill into a penalty-bearing April lump.

Deductions consultants miss

Home office, phone and internet, continuing education, software subscriptions, and the Self-Employed Health Insurance Deduction are all frequently underclaimed. The home office deduction also unlocks mileage from home to client sites, since a qualifying home office makes those trips business travel rather than commuting.

Retirement options

Solo 401(k) allows up to $70,000 in total contributions for 2025, plus Roth option and catch-up for age 50+. SEP-IRA is simpler to administer but has lower limits and no Roth option. Because the employee-deferral piece of a Solo 401(k) doesn't depend on a percentage of profit, it shelters more at moderate income levels than a SEP can.

Have a specific situation?
Call the office and a human answers.
(561) 660-8182

Multi-state clients and remote work

Florida consultants pay no state income tax at home, but income earned working in another state can be taxable there:

  • Days physically worked in a client's state can create a filing obligation in that state
  • Purely remote work from Florida for out-of-state clients generally stays Florida-source
  • States differ on thresholds and enforcement, so travel-heavy consultants should keep a day log

Books and audit posture

A separate business checking account and a card that never buys groceries are the cheapest audit protection available. Round-number deductions, a home office claimed on vague square footage, and vehicle use logged from memory are the patterns that draw attention; contemporaneous records end those conversations quickly.

Common questions

When should I become an S-corp?
Once net income consistently clears $45,000 to $60,000. The payroll and administration costs have to be less than the SE tax savings.
How much should I set aside from each invoice?
A common starting band is a quarter to a third of net income, refined once we've run your actual numbers. The right figure depends on your other household income and whether the S-corp election is in place.
Can I deduct my home office if I also work at client sites?
Yes, if the space is used regularly and exclusively for the business and it's your principal place for administration. Client-site work doesn't disqualify it; a guest bed in the office usually does.
Do I owe taxes in my clients' states?
If you work remotely from Florida, generally no. If you spend working days physically in a client's state, that state may want a nonresident return. A simple travel log settles most of these questions.

Related

More industries we serve

A Conversation, Not A Form

Ready to get started?

Schedule a free consultation today and see how KG Tax & Consulting can help you.

Schedule Appointment