Putting the One Big Beautiful Bill to Work in Your Business

Helping business owners think through the implications of the OBBB for their business. 

While summaries and analysis of the impact of the One Big Beautiful Bill Act (OBBBA) are readily available, challenges around how to quantify any increased free cash flow for a specific business continue. Further complicating the matter are questions around how to redeploy that cash flow, as well as the OBBBA’s impact on different corporate structures.  

What follows is a three-part resource designed to guide a conversation focused on these issues, using a fictitious business operating as a C-Corp in one example, and an S-Corp in the other. The case studies approximate the impact on free cash flow under each entity type and then go on to address planning concerns on the minds of many small to medium business owners as reported in the Principal SMB Sentiment survey. This is followed by a side-by-side comparison of the case studies, highlighting the different ways the OBBBA impacts these entity types as well as how the corresponding planning process for the increased free cash flow will vary. These examples, while directionally correct, should not be viewed as results realized by an actual business. 

Meet Maria… 

Maria owns a regional logistics and delivery company in the Pacific Northwest. The business operates 35 trucks across three states, generates $12 million in annual revenue, and employs 40 full-time staff. 

Maria’s Challenges as a Business Owner 

• Talent retention – Employee turnover has averaged 25% annually, with training and recruitment costs draining resources. 
• Personal planning – At age 49, Maria has $1.2M in retirement savings but feels behind. She also lacks sufficient survivor protection. 

Case Study 1: C-Corp 

Opportunity Under OBBBA 

The OBBBA confirmed the permanent 21% flat corporate tax rate and enhanced the Qualified Small Business Stock (QSBS) exclusion, allowing up to $15M of tax-free gain after a 5-year holding period. With bonus depreciation and expanded deductions, Maria freed up $150,000 in annual cash flow. 

Strategies Funded by Improved Cash Flow 

• Employee Benefits: Allocated $35,000 annually to enhanced health and dependent care benefits and added carve-out plans for key employees. 
• Retirement & Protection: Directed $55,000 annually into a corporate-sponsored cash balance plan and funded a $3M Cash Value Life Insurance (CVLI) policy with $45,000 annual premium contributions. The CVLI provided survivor protection and projected ~$80,000 in retirement income starting at age 65. 
• Business Growth: Allocated $15,000 annually for technology upgrades and fleet modernization, while positioning the company for a QSBS-qualified exit. 

Anticipated Results 

• Employee turnover reduced from 25% to 15%, saving over $100,000 annually. 
• Retirement savings increased by 40%, combining cash balance plan funding and CVLI contributions. 
• VUL projected to generate $80,000 annually in tax-advantaged retirement income. 
• Fleet modernization improved efficiency and raised net margins by 2%. 
• Future succession planning strengthened via QSBS exclusion. 

Key Lesson 

For C-Corp owners, the OBBBA’s permanent 21% corporate rate and QSBS exclusion create powerful incentives to retain the structure. By layering VUL and cash balance planning strategies, owners can secure personal retirement income while growing enterprise value. 

Case Study 2: S-Corp 

Opportunity Under OBBBA  

The OBBBA permanently lowered individual tax rates and secured the 20% QBI deduction for pass-through owners. With accelerated deductions for equipment purchases, Maria freed up $150,000 in annual cash flow. 

Strategies Funded by Improved Cash Flow 

• Employee Benefits: Allocated $40,000 annually to add dependent care and paid family leave benefits, offset by new OBBB credits. 
• Retirement & Protection: Increased annual qualified plan contributions by $50,000 and established a $3M Cash Value Life Insurance (CVLI) policy funded at $45,000 per year. The CVLI was funded at maximum premium levels, projected to provide ~$80,000 in tax-advantaged annual income from age 65 to 80, while ensuring survivor protection. 
• Business Growth: Applied $15,000 in savings to upgrade routing technology and modernize fleet vehicles. 

Anticipated Results 

• Turnover reduced from 25% to 15%, saving over $100,000 annually. 
• Retirement savings increased by 40%, including CVLI funding. 
• VUL projected to generate $80,000 annually in tax-advantaged retirement income. 
• Fleet modernization improved efficiency and raised net margins by 2%. 

Key Lesson 

For S-Corp owners, the OBBB’s permanent QBI deduction and expanded deductions create an opportunity to redirect tax savings into employee retention and insurance-based retirement strategies. 

Entity Choice Comparison – S-Corp vs. C-Corp 

Any analysis of the OBBBA‘s impact on a specific business could lead to a discussion of the relative advantages of the current corporate structure. While the choice of entity type involves factors beyond the scope of this discussion, the OBBBA does play a role in that decision making process, as outlined below. 

S-Corporation 

• Owner benefits from permanent 20% QBI deduction on qualified income. 
• Enhanced cash flow ($150,000/year) redirected to: 
  • Employee benefits (childcare credit, family leave) 
  • Cash balance plan 
  • Personal VUL for retirement income ($80k projected annually) 
  • Equipment upgrades with bonus depreciation 
• Succession planning: potential sale as pass-through business; taxed at capital gains with no QSBS exclusion. 
• Employee retention improved via enhanced benefits and retirement plan contributions; turnover reduced from 25% to 15%. 
• Owner retirement security enhanced through: 
  • Increased 401(k)/cash balance contributions 
  • VUL supplemental retirement income 
• Business efficiency gains: new routing software & fleet modernization improved margins by 2%.

C-Corporation 

• No QBI deduction, but benefits from permanent 21% flat corporate tax rate. 
• Enhanced cash flow ($150,000/year) redirected to: 
  • Employee benefits (health, dependent care) 
  • Corporate cash balance plan for Maria & executives 
  • Personal VUL funded via salary/bonus ($80k projected annually) 
  • Potential COLI for executive benefits 
  • Fleet/technology reinvestment with bonus depreciation 
• Succession planning: Eligible for QSBS exclusion (up to $15M of gains tax-free after 5 years). 
• Employee retention improved with expanded benefits and carve-out plans; turnover reduced from 25% to 15%. 
• Owner retirement security enhanced through: 
  • Corporate-sponsored cash balance plan 
  • VUL supplemental retirement income 
  • Additional COLI funding option on company’s balance sheet 
• Business efficiency gains: technology upgrades & fleet modernization improved margins by 2%. 

Conclusion 

As seen above, the OBBBA benefits each entity type in different ways, as does the list of potential strategies to put in place to improve the posture of the business and Maria’s personal planning. Ultimately, the potential strategies will reflect the planning objectives of the business in question versus the assumptions made here. The bottom line? Quantifying improved cash flows and identifying unfunded planning objectives are the clear next steps in designing and implementing a strategy based on the OBBBA. 

For Additional Reading:  

One Big Beautiful Bill Act of 2025 

Principal SMB Sentiment