Originally published in Entrepreneur
By Kurt Piwko
Now that the tax filing season is over, it’s a good time for companies wanting to take even greater advantage of tax law changes to examine the structure of their businesses. It just might save them money.
Many owners of pass-through entities are wondering whether becoming a C corporation is the right move because of the lower 21 percent corporate tax rate that was part of recent tax reform legislation.
While a 21 percent tax rate is certainly a head-turning number compared to the top individual rate of 37 percent, discerning what is actually the best entity structure for a business is a complex matter that requires some considered analysis. That analysis starts with knowing how much of the firm’s earnings will be distributed. For comparison purposes, pass-through entity owners could pay up to 37 percent on income, but if they qualify for a new 20 percent pass-through deduction, they will pay an effective tax rate of 29.6 percent. They will not pay any tax on income when it is distributed.
Tax advantages of a C corp can be huge.
How does a C corp stack up against that?
Read the full article at https://www.entrepreneur.com/article/317300