When the employee is also an owner of the business, the income tax benefits will generally depend upon the type of business and the relative tax brackets. For instance, the bonus plan offers tax leverage to the owners of a C corporation when it is in a higher tax bracket than the shareholder/employees. If the business is in a lower tax bracket, the split-dollar plan offers more tax leverage. Generally, with a partnership or a limited liability company taxed as a partnership, there is no income tax leverage since the entity's income flows through to the owners and is taxed at their individual rate.

If the business is an S corporation, the opportunity for income tax leverage will generally depend on the number of owners involved in the plan. If the shareholder/employee is the sole owner, there is no tax leverage because the owner and the business are taxed at the same bracket. If there are multiple owners and the intent is to benefit some but not all of the owners, a split-dollar or bonus plan may be implemented for minority shareholder/employees.