Top 5 overlooked tax-saving opportunities when operating multiple businesses

It’s easy to miss opportunities for tax savings if you don’t know where to look. Many business owners focus on compliance and skip out on strategic tax planning that could significantly improve their after-tax outcomes. With the right guidance, they can enhance their take-home pay by leveraging the knowledge and experience of a trusted advisory team.

Below are five of the most overlooked tax-saving opportunities for multi-entity operators and how to make them work for you.

1. Evaluate Entity Structure for Tax Efficiency

Choosing the right entity structure is foundational. Pass-through entities like S corporations, partnerships, and single-member LLCs allow income to flow directly to owners’ personal tax returns, avoiding double taxation. This structure is especially advantageous when:

• Owners are not in the highest tax brackets
• The business distributes a large portion of its earnings
• The §199A Qualified Business Income (QBI) deduction is available

In some cases, converting to a C corporation may be more beneficial due to the lower corporate tax rate. This is particularly relevant for high earners who may face limitations on pass-through deductions. Explore this strategy further with our related article.

2. Leverage Strategic Elections and Groupings

Section 469 Grouping Elections

Grouping activities under IRC §469 can allow taxpayers to deduct passive losses from activities such as rental real estate or businesses in which they do not materially participate—losses that would otherwise not be allowed. This is especially useful for business owners with multiple entities.

Key considerations include:

• Grouping must reflect an “appropriate economic unit” based on factors like ownership, control, and interdependence
• Elections are time-sensitive and must be disclosed to the IRS
• Regrouping is only allowed under specific conditions, such as IRS audits or material changes

Real Estate Professional Elections

Under §469(c)(7), real estate professionals can elect to treat all rental activities as a single activity, helping them meet the 750-hour and majority-of-services thresholds required to deduct passive losses.

3. Apply Advanced Tax Planning Tools

Multi-entity owners should also consider the following strategies:

• QBI Aggregation: Strategically aggregating qualified business income across entities can increase the §199A deduction.
• Basis Management: Properly tracking basis allows owners to claim appropriate distributions and deductions.
• Section 179 Expensing: Planning to deduct the full cost of qualifying equipment and software can have major impacts on taxable income.
• Bonus Depreciation: Strategically applying bonus depreciation across entities can accelerate deductions.
• Interest Expense Limitation (IRC §163(j)): Forethought regarding interest expenses can help taxpayers stay under the threshold to preserve interest deductions.
• 1031 Exchanges: Deferring capital gains by reinvesting proceeds in like-kind property can greatly reduce tax liability in the year of sale.
• Qualified Opportunity Zones: Investing in these zones can allow taxpayers to defer and potentially exclude certain gains.
• Enhanced Qualified Small Business Stock (QSBS) Benefits: Increased lifetime gain exclusions and broader eligibility under the One Big Beautiful Bill Act (OBBBA) enable more taxpayers to take advantage of this strategy.

4. Annual Review and Holistic Planning

Tax planning isn’t a one-time event. It’s a strategy that should grow with your business. For owners managing multiple entities, the stakes are even higher. Without regular review and coordination, even well-structured plans can become outdated or misaligned.

Your tax strategy should reflect current business realities and future goals. Here’s what that looks like in practice:

• Reassess entity structures and elections annually
• Coordinate business and personal tax strategies
• Work with a firm that handles both business and individual returns

For closely held or family-owned businesses, personal and business finances are often deeply intertwined. Coordinating these strategies helps bridge decisions made at the entity level with long-term personal wealth goals, succession planning, and estate considerations.

Discover how a family-owned business used this approach.

5. Work with the Right Advisors

Tax strategy is only as strong as the team behind it. For business owners managing multiple entities, the right advisor helps you anticipate challenges, uncover opportunities, and align your decisions with your goals.

A proactive tax advisor can help you:

• Restructure entities for optimal tax outcomes
• Model exit and liquidity scenarios
• Design equity compensation plans
• Conduct buy/sell-side due diligence
• Maintain ongoing compliance and monitoring

With a coordinated, relationship-driven team, your tax strategy becomes a foundation for growth, turning routine tax compliance into opportunity and empowering smarter decisions at every stage of your business.

We Can Help

At Elliott Davis, we specialize in refining tax planning strategies for high-net-worth families and closely held businesses. Our integrated team of corporate, individual, trust, and international tax professionals work together to deliver strategies that are as dynamic as your organization.

Ready to explore new tax-saving opportunities? Contact us today to start the conversation.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.