Case Study: A Consulting Business Owner's QBI & Solo 401(k) Combination

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: Independent management consultant, S-corp
Net business income: ~$240,000/year
Structure: Single-owner S-corp, no employees
Concern: Whether SSTB status would wipe out the QBI deduction

The situation

Daniel left a consulting firm to go independent, billing large corporate clients directly through his own S-corp. His CPA at the time filed a return that took a reasonable salary and a QBI deduction without ever checking whether "management consulting" counted as a specified service trade or business (SSTB) — a category that phases out the QBI deduction at higher income. Daniel's income was high enough that this question mattered a lot, and nobody had actually run it.

What we did

Reviewed the actual services Daniel billed against the QBI (Section 199A) SSTB definitions line by line rather than assuming based on the word "consulting"
Restructured his engagement descriptions and invoicing to accurately reflect the non-SSTB implementation and project-management work that made up a meaningful share of his billings
Opened a Solo 401(k) and maximized both the employee deferral and the employer profit-sharing contribution, which also reduces the income tested against the QBI phase-out
Rechecked his reasonable salary figure, since a lower defensible salary (within reason) leaves more in QBI-eligible distributions

The numbers

Daniel's illustrative annual tax effect

QBI deduction preserved through accurate SSTB analysis~$18,000

Solo 401(k) contribution (employee + employer)$66,000

Approximate tax value of the Solo 401(k) contribution~$21,000

Approximate total annual tax benefit vs. prior filing approach~$25,000–$30,000

The result

The SSTB question turned out to be genuinely close for Daniel — his engagements were a real mix of strategy advice (which leans SSTB) and hands-on implementation work (which doesn't), and how he described and invoiced that work mattered as much as what he actually did. This wasn't about reclassifying anything dishonestly; it was about billing and documenting the real nature of his work accurately, instead of defaulting to language that accidentally maximized his SSTB exposure.

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