{"id":82356,"date":"2026-06-12T08:00:00","date_gmt":"2026-06-12T13:00:00","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=82356"},"modified":"2026-06-09T10:46:36","modified_gmt":"2026-06-09T15:46:36","slug":"using-entity-structuring-conversations-to-open-the-advisory-door","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/advisory-services\/using-entity-structuring-conversations-to-open-the-advisory-door\/","title":{"rendered":"Using entity-structuring conversations to open the advisory door"},"content":{"rendered":"\n

There is a version of this conversation that happens every year in tax practices: A client comes in for their S-corp return<\/a>, you notice the salary looks light, you flag it in the notes, maybe mention it briefly at pickup, and move on. The return gets filed, the client leaves, and the advisory opportunity<\/a> disappears for another 12 months.<\/p>\n\n\n\n

There is another version: You call that same client in June, walk through the compensation picture, model out two or three scenarios, and by the end of the conversation, you\u2019re discussing retirement plan<\/a> design, the QBI deduction<\/a>, and whether a C-corp conversion might be worth exploring given their growth trajectory. Same client. Same technical knowledge on your end.<\/p>\n\n\n\n

What changed was the conversation. That is the difference between compliance and advisory.<\/strong><\/p>\n\n\n\n

Entity structuring<\/a>, especially S-corp optimization, is one of the cleanest advisory entry points available. It is technical, it has a measurable tax impact, and it naturally expands into retirement planning, succession strategy<\/a>, and exit discussions. If you\u2019re building advisory into your firm, this is a practical place to start.<\/p>\n\n\n\n

The S-corp opportunity: what most clients don\u2019t understand<\/strong><\/p>\n\n\n\n

The mechanics are familiar. An S-corp owner pays themselves a reasonable salary<\/a> subject to payroll taxes, and takes additional distributions that are not subject to FICA. The payroll tax savings can be meaningful, often $5,000 to $25,000 or more, annually, for a profitable owner. That outcome depends on the structure being maintained correctly year after year.<\/p>\n\n\n\n

What most clients do not understand is that \u201creasonable compensation\u201d is not a fixed number, and that getting it wrong in either direction creates problems. Set the salary too low, and the IRS has an increasingly active enforcement posture on S-corp compensation, particularly for profitable service businesses. Set it too high, and you\u2019re leaving money on the table through unnecessary payroll tax exposure.<\/p>\n\n\n\n

The advisory opportunity<\/a> is in the modeling. When you show a client their after-tax position across two or three salary scenarios, factoring in payroll tax, QBI impact, retirement contribution limits, and state-level considerations, you are delivering something they cannot get from a tax preparation service alone. You are now quantifying a decision.<\/p>\n\n\n\n

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Reasonable compensation technical framework<\/strong><\/p>\n\n\n\n

Guidance and case law says that S-corp shareholder-employees must be paid a salary commensurate with the services they provide. While \u201creasonable\u201d is inherently fact-specific, the IRS and courts commonly look at the following areas:<\/p>\n\n\n\n