Choosing the right business entity can dramatically impact a client's tax liability, self-employment taxes, retirement planning opportunities, Qualified Business Income (QBI) deduction, and long-term business goals. Yet many business owners—and even some tax professionals— continue to rely on outdated assumptions when evaluating sole proprietorships, LLCs, S corporations, and C corporations.
This practical, example-driven course explores how entity selection decisions affect real-world tax outcomes for self-employed individuals and small business owners. Through case studies, tax comparisons, and planning scenarios, participants will learn how different entity structures influence self-employment taxes, payroll requirements, deductions, fringe benefits, basis calculations, and overall tax planning opportunities.
The course also examines common misconceptions surrounding LLCs and S corporations, discusses reasonable compensation requirements, and explores situations where partnerships or C corporations may provide advantages. Participants will gain practical knowledge they can immediately apply when advising clients on business structure decisions.
Learning Objectives
Upon completion of this course, participants will be able to:
• Compare the tax treatment of sole proprietorships, partnerships, S corporations, and C corporations
• Explain how the Qualified Business Income (QBI) deduction impacts entity selection decisions
• Identify situations where an S corporation election may provide tax advantages
• Recognize common reasonable compensation issues and IRS compliance concerns
• Evaluate how self-employment taxes affect overall entity planning outcomes
• Understand the tax treatment of LLCs and available entity elections
• Identify circumstances where C corporations or Qualified Small Business Stock (QSBS) opportunities may warrant consideration
This course counts for 2 Hours of Federal Tax Law for IRS Continuing Education.
Frequently Asked Questions
Is an LLC or an S corporation better for taxes?
There is no one-size-fits-all answer. The best choice depends on income level, self-employment tax exposure, payroll requirements, QBI deductions, administrative costs, and long-term business goals.
What are the most common entity selection mistakes?
Common mistakes include assuming LLCs automatically reduce taxes, failing to consider QBI deductions, overlooking reasonable compensation requirements, and selecting an entity without evaluating long-term business objectives.
What is entity selection in tax planning?
Entity selection is the process of determining how a business should be structured and taxed. Common options include sole proprietorships, LLCs, partnerships, S corporations, and C corporations.
Does an LLC automatically reduce taxes?
No. An LLC is a legal entity, not a tax classification. Tax savings depend on how the LLC is taxed for federal tax purposes.
Should every profitable business become an S corporation?
Not necessarily. Factors such as QBI deductions, payroll requirements, retirement contributions, and compliance costs may affect whether an S corporation provides a net benefit.
What is the biggest tax advantage of an S corporation?
The primary advantage is the potential reduction of self-employment taxes on a portion of business profits.
How does the QBI deduction affect entity selection?
The Qualified Business Income deduction can change the overall tax outcome of different entity structures and should be considered before making recommendations.
Why do tax professionals need to understand entity selection?
Entity selection impacts tax liability, payroll taxes, deductions, retirement planning, and long-term business strategy for many clients.
Will this course include practical examples?
Yes. The course includes case studies and numerical examples that demonstrate how entity decisions affect real-world tax outcomes.
About the presenter:
Jason Dinesen (EA, LPA) is a tax nerd, entrepreneur, tax expert, and a well-known presenter of continuing education courses.
Known for his sharp tax interpretations, he is one of the quickest to bring the analysis of the latest tax updates and IRS guidance to the professional community. Jason has coached over 200,000 accounting, tax, and HR professionals on various topics of accounting, individual taxation, corporate taxation, professional ethics, and much more.
He has presented dozens of webinars on Form 1099 (for 10 years on this subject!), marriage in the tax code, tax updates, the new Form W-4, payroll updates, filing status, tax credits, corporation and partnership taxation, and other issues relating to the modern-day setting.
