Using a Management Company for Business Expense Optimization

For business owners with partners, handling personal business expenses equitably can be complex. A management company structure allows owners to separate expenses while maintaining tax efficiency. By directing certain deductions through an S-corporation or management entity, owners can take advantage of tax-deductible expenses without affecting their partners.

Key Benefits of a Management Company

• Optimized tax deductions – Business expenses such as vehicles, family salaries, and retirement contributions can be structured for full deductibility.
• Flexibility in business ownership expenses – Allows partners to customize their compensation and benefits without impacting each other.
• Expanded tax planning options – Opens access to benefits like tuition reimbursement plans, the 14-day rental rule, and board meeting deductions.

Common Strategies Using a Management Company

• Hiring spouses and children – Enables reasonable wages, tuition reimbursement, and retirement benefits.
• Company vehicle deductions – Maintains IRS compliance while optimizing tax treatment.
• Board meeting and travel deductions – Allows certain expenses to be structured within a business framework.

Considerations Before Forming a Management Company

• Must meet IRS deductibility rules
• Startup and compliance costs

A management company can create valuable tax savings when structured correctly. If you think this approach might apply to your business, contact us to analyze your potential benefits.

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