Case Study: A Digital Agency's Family Management Company & R&D Credit

This is an illustrative composite, not a real client. It is built from patterns we've seen across many client engagements — names, identifying details, and figures are fictionalized or combined for illustration and do not describe any actual person or business. Results are not typical or guaranteed; every situation depends on individual facts and circumstances. This is not tax, legal, or financial advice.

Client snapshot (illustrative composite)

Business: 9-person digital marketing & marketing-automation agency, S-corp
Net income: ~$420,000/year
Family: Married, three teenage children
Overlooked detail: Agency builds custom automation tooling for clients, never claimed R&D credit

The situation

The agency built genuinely technical custom marketing automation and integration tooling for clients — not just running ad campaigns — but the owner had never considered that engineering work might qualify for the R&D tax credit, assuming it was only for "real" tech companies. Separately, the family had never used a formal structure for the kids' part-time involvement in the business beyond occasional informal help.

What we did

Reviewed the agency's custom automation and integration development work against the four-part test for the R&D tax credit and found a meaningful qualifying portion of two developers' time
Set up a family management company to formalize and pay the three teenagers for real work — social media scheduling, basic reporting, and administrative support — through a structure the agency's S-corp status alone didn't allow for FICA-exempt family wages
Built contemporaneous project-tracking documentation for the R&D credit going forward, rather than trying to reconstruct developer hours after the fact
Coordinated the credit claim with the agency's existing QBI position to confirm neither reduced the other unexpectedly

The numbers

The agency's illustrative annual result

Qualifying developer wages identified for R&D credit$180,000

Approximate federal R&D credit claimed~$18,000

Deductible wages paid to children via family management company$28,000

Approximate combined annual tax benefit~$28,000–$32,000

The result

The R&D credit had been sitting unclaimed for years simply because "marketing agency" didn't sound like an R&D-eligible business to the owner — the actual test is about the nature of the work, not the industry label. The family management company gave the kids' involvement a real structure with real payroll, rather than informal help that generated no tax benefit at all.

Does your agency build custom tools, integrations, or automation for clients?

That work might qualify for the R&D tax credit even if you've never thought of your agency as a tech company. We'll check.

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