Tax Strategy Tuesday: Board of Advisors
Written By BEC CFO & CPA
Imagine being able to deduct the cost of a weekend business retreat at a resort or a strategy dinner with close friends—all within the bounds of the tax code.
It’s not a loophole or a gray area. When executed properly, the formation of a Board of Advisors creates a legitimate business framework that supports deductions for meals, travel, lodging, and offsite meetings—as long as they serve a bona fide business purpose and are well documented.
This strategy is especially valuable for owners of S Corporations and Partnerships, and it's one of the most overlooked ways to align tax compliance with strategic planning. Here’s a breakdown of how it works:
WHAT is a Board of Advisors?
A Board of Advisors is an informal, non-governing group of individuals who provide external insight, accountability, and strategic feedback to the business. Unlike a Board of Directors, the Advisory Board does not have fiduciary duties, voting rights, or formal decision-making power.
This consulting role and is often filled by professionals, peers, or experienced colleagues who offer periodic guidance on business growth, operations, and long-term planning.
WHY is this important from a tax standpoint?
The IRS allows deductions for ordinary and necessary business expenses, but those deductions must be clearly connected to a bona fide business purpose.
By establishing a functioning Advisory Board—and documenting its activities—you create a formal structure that supports the legitimacy of:
Meal expenses related to strategic discussions or performance reviews
Travel costs associated with board meetings, planning sessions, or retreats
Offsite gatherings where the agenda is focused on business matters
This strategy enhances the defensibility of such deductions by demonstrating intentional business planning and oversight, rather than ad hoc or personal spending.
WHO should serve on the Board?
The composition of your Advisory Board should reflect individuals who can add value to your business. This could include:
Industry professionals
Key employees
Trusted peers, your spouse, or even family members, provided they are meaningfully engaged and fulfill their advisory role
To maintain compliance and ensure clarity, each Advisor should sign a written Advisory Agreement confirming their role is unpaid, advisory-only, and without governance authority.
WHEN should meetings occur?
A quarterly cadence is common, but fewer formal meetings (even one or two annually) may suffice if well documented. The key is to maintain agendas, notes, and records that demonstrate strategic purpose and participation of each meeting.
WHERE should meetings be held?
Meetings can take place at:
Your personal residence
Your principal place of business
A rented conference space
Or, in certain cases, a resort or offsite venue
COMPLIANCE Action Items:
Advisory Agreement - signed by each advisor and retained in records (see example attached)
Meeting Records/Travel Log - date, location, attendees, agenda, etc. for business meals and travel; this supports ordinary and necessary business activity under IRC §162
Expense Substantiation - retain receipts for meals, travel and lodging in an orderly way to meet substantiation requirements under IRC §274(d)