Tax Strategy Tuesday: Family Office
Written By BEC CFO & CPA
Over the coming weeks, we’ll share a series of Entrepreneurial Tax Strategies to help you get ready for Tax Planning Season. These insights are friendly reminders of strategies—each one has been carefully selected for its effectiveness for investors and business owners like you and we’re starting with a true game-changer.
Introducing the Entrepreneurial Family Office
When most people hear “Family Office,” they imagine billionaires with private investment teams managing nine-figure fortunes. But you don’t need to be ultra-wealthy to benefit from a Family Office. For entrepreneurial investors, a Family Office can be a lean, formal legal entity—usually a single-member LLC—that centralizes the management of your real estate operations, investments, and long-term wealth strategies.
Think of your Family Office as the “central command” of your real estate empire. It provides advisory and administrative services to your other entities in exchange for management fees. By doing so, it allows you to deduct expenses such as salaries paid to family members, home office costs, travel, software, and professional services—turning overhead into legitimate tax write-offs while adding professionalism and scalability to your business.
Why Consider a Family Office?
A properly structured Family Office does far more than create deductions—it creates a tax-efficient and compliant ecosystem that converts many personal or investment-related costs into business expenses, including:
Travel for property scouting, masterminds, and coaching
Back-office support, including salaries to family members
Educational costs related to business development
Legal and advisory fees
Home office expenses
But more importantly, a Family Office can:
Protect assets by separating your management and advisory functions from your operational businesses
Increase operational efficiency by centralizing strategy, analysis, and administration
Lay the foundation for estate and succession planning, giving you a clear framework for involving family members
Who Should Consider This?
This strategy is ideal for real estate entrepreneurs and investors who:
Have multiple income streams, properties, or business entities
Face significant operational overhead
Involve spouses, children, or relatives in their business
Feel their growing enterprise has outgrown informal systems
If your spouse or children already help with your business, a Family Office can formalize those contributions while ensuring you capture every available deduction.
Where and How Does It Work?
Your Family Office operates as a standalone entity that contracts with your existing real estate businesses. It can be run from a separate office or a documented home office—what matters most is thorough documentation, a clear business purpose, and maintaining separation from personal use.
To set it up, you’ll form an LLC or LP, define the services your Family Office provides (e.g., strategy, administration, compliance, research), and create service agreements with your operating entities. Those businesses pay management fees to your Family Office, which in turn pays salaries, covers expenses, and takes deductions accordingly.
Success here hinges on solid legal and accounting foundations: clear contracts, meticulous records, payroll documentation, and dedicated bookkeeping will ensure your Family Office stands up to IRS scrutiny.
When—and Why—It Matters Now
The Family Office strategy becomes invaluable when you:
Have consistent business income or high overhead
Want to involve family members in your business in a tax-advantaged way
Are preparing for generational wealth transfer or succession planning
Finally, a Family Office setup as a Small LLC operates as a Disregarded Entity, meaning it does not require a separate business tax filing, but is instead reported on your Individual Tax Return under Schedule C. With proper documentation, bookkeeping and compliance, this entity can streamline management of your real estate empire and unlock powerful tax savings. Please reach out to a BEC Tax Team member to learn more.