Tax Strategy Playbook
eCommerce tax planning is the practice of arranging entity structure, owner pay, inventory accounting, credits, and state exposure before year-end so a profitable brand keeps more of what it earns. This page is the playbook: the strategies our advisors reach for most, and who each one fits.
None of these strategies is exotic, and none of them works as a December surprise. They compound when someone who knows eCommerce watches your numbers all year and applies the right ones at the right time. Every strategy below depends on your facts — profit level, state footprint, entity, and goals — so treat this as a map, not advice for your specific return.
The legal wrapper around the business and the way you pay yourself set the baseline for everything else. They deserve a fresh look every time profit steps up.
Above a certain profit level, a pass-through owner can reduce self-employment tax by taking a defensible salary and receiving the remaining profit as distributions. Setting that salary is the whole game — too low invites IRS attention, too high overpays payroll tax for no reason.
S corps explained →The structure that made sense at $200K of profit is often wrong at $2M. Reinvestment plans, state footprint, investor conversations, and exit timelines all move the answer between LLC, S corp, and C corp — and switching has tax consequences worth modeling before you act.
The pass-through deduction phases out and interacts with wages, entity type, and taxable income. Owners near the thresholds can often preserve it with deliberate decisions about salary, retirement contributions, and timing.
For a brand that holds inventory, the accounting itself is a tax strategy. Sloppy COGS quietly overstates or understates income every single year.
Shrinkage, landed costs, and dead stock write-downs all change taxable income. If the inventory number on the balance sheet is wrong, the tax return is wrong — usually in the government's favor.
Why your shrinkage number is costing you →Equipment, vehicles, warehouse build-outs, and purchased buildings can often be deducted far faster than the default schedules. On a building purchase, a cost segregation study frequently pulls years of deductions forward into the years you need them.
How buying a warehouse changes your tax picture →Accounting method elections, prepaid expenses, and year-end purchasing decisions move income between years that may be taxed at very different rates. This only works when it happens before December 31 — which is why planning beats filing.
Credits reduce tax dollar-for-dollar, and eCommerce brands qualify more often than their owners assume.
Product formulation, packaging engineering, manufacturing process work, and in-house software development can all qualify. Brands developing their own products routinely leave this credit unclaimed for years.
R&D tax credits for eCommerce →Credits for hiring from targeted groups and for certain vehicle and energy purchases come and go with legislation. A planning cadence is what catches them while they still apply to you.
Some of the most durable strategies move money from the tax line to your own balance sheet instead of to spending.
Solo 401(k)s, SEP IRAs, and — in strong profit years — cash balance plans create large current deductions while building wealth outside the business. Plan type and timing decide how much room you actually get.
Legitimately employing your kids or spouse shifts income into lower brackets and can fund their retirement accounts. The word that matters is legitimately: real work, real rates, real documentation.
An accountable plan reimburses owners tax-free for business use of personal assets, including a home office. The Augusta rule lets the business rent your home for genuine business events a limited number of days per year — deductible to the company, tax-free to you when the requirements are met.
Selling everywhere means owing taxes in more places than most sellers expect — and planning around it before states come looking.
The federal protection that once kept out-of-state sellers safe from state income tax is eroding fast. Where your inventory sits and how your website behaves now determine which states can tax you.
The state income tax trap →Most states now let a pass-through business pay state income tax at the entity level, restoring a federal deduction the SALT cap otherwise takes away from the owner. It is close to free money — but the election windows and mechanics differ by state.
Foreign-owned sellers and US brands expanding abroad face their own layer: withholding, treaty positions, reporting like Form 5472, and structuring choices that are expensive to unwind later.
US tax obligations for foreign sellers →The largest tax bill of your life is the one attached to selling the business. It is also the most plannable — if you start years before the sale.
Qualified small business stock eligibility, asset versus stock sale framing, installment timing, and even state residency are decisions with multi-year clocks on them. For businesses that use our Exit Planning, savings can shift from five figures all the way up to seven.
How Exit Planning works →Our tax advisors review your last two years of returns and current-year numbers, model the strategies that fit your facts, and build a written plan you approve before anything is implemented — then meet with you through the year so nothing gets missed.
Filing and planning are different jobs. A filer reports what already happened; a planner changes the outcome before year-end. Over 90% of the time our tax advisors find strategies a previous CPA or accounting firm missed.
As soon as the business is reliably profitable. Most strategies only work before December 31 — some, like exit planning, need years of runway. Our Premium Planning clients meet with a tax advisor at least four times a year.
Nothing. The first planning session is zero-cost: an hour with a tax advisor reviewing your returns and current-year numbers to estimate the savings being left on the table.
The math typically starts working around $150K in annual net profit, where a first-year plan commonly uncovers $20K–$50K in savings. More profit means more opportunity.
A zero-cost planning session shows you exactly what a real tax plan would change.
$100M+ in tax savings uncovered for eCommerce brands
