3 to 20 people, mixed W-2 and 1099, AWS and SaaS bills stacked to the ceiling. We clean up contractor classification, run the §41 R&D credit on your dev hours, and engineer §199A QBI around the W-2 wage limits so your draw is not double-taxed.
Most boutique agencies leave $40K to $120K in federal tax on the table by misclassifying contractors, ignoring the R&D credit, or tripping the §199A SSTB cliff at $241,950 of taxable income (2024, single).
The DOL's 2024 economic-reality test plus IRS common-law factors. Your "1099 senior dev who only works for you" is probably a W-2. We audit your roster, document control factors, and either restructure the role or accept it as W-2 before the IRS reclassifies and charges back FICA, FUTA, and §3509 penalties.
29 CFR §795; IRC §3121; §3509; Rev. Rul. 87-41Above the $241,950 single / $483,900 joint threshold (2024), the deduction is limited to the greater of 50% of W-2 wages or 25% of wages plus 2.5% of UBIA. Marketing and consulting agencies hit SSTB rules. We model wage levels and entity choice so you actually get the deduction instead of phasing out.
IRC §199A(b)(2), (d)(2); Treas. Reg. §1.199A-5Custom internal tools, client-side automation, AI integrations, novel SaaS features all qualify if they meet the four-part test. Wages of devs, contracted dev time at 65%, and cloud compute count. Payroll-tax offset up to $500K for qualified small businesses under §41(h). We do the time-and-cost study and file Form 6765.
IRC §41(d), §41(h); Treas. Reg. §1.41-4; Form 6765Figma, Adobe, GitHub, Slack, Notion, HubSpot, AWS, Vercel, OpenAI API. All ordinary and necessary under §162. We split capitalized vs deducted under Rev. Proc. 2000-50 (now §174 amortization for internal-use software), so your stack hits the right line and the right year.
IRC §162(a); §174; Rev. Proc. 2000-50; Notice 2023-63SaaStr, INBOUND, Cannes Lions, Adobe MAX, client-site visits. Airfare, lodging, 50% of meals under §274(n), conference fees, ground transport, baggage. We build a per-trip expense template so each conference becomes a documented deduction, not a question mark in QuickBooks.
IRC §162(a)(2); §274(n); Treas. Reg. §1.274-5TMost agency owners are S-Corp shareholders. We set reasonable comp under §1402, run an accountable plan for owner home office and phone, and reimburse instead of deducting personally. Cleaner books, smaller W-2, no §132 fringe benefit headaches.
IRC §62(c); §132; §1402(a); Treas. Reg. §1.62-212-person digital agency, $2.4M revenue, mixed marketing and custom dev work in tax year 2024. Prior CPA had never run a §41 study because they "did not do R&D."
$89,000 R&D credit claimedWages of four devs, 65% of two contracted dev firms, and cloud compute on three internal automation builds qualified under the four-part test. Credit applied against payroll tax under §41(h) for the small-business election, freeing cash flow inside the year.