How to Stay Away from the Dark Side While Considering a C Corporation
Back in 1980, over 50% of businesses filed as C Corporations or a corporation in which the shareholders are taxed separately from the entity. However, the number of businesses choosing the structure of a C-corp has been steadily declining, and most U.S. businesses today do not pay the corporate income tax. Instead, they’re what’s known as pass-through businesses , because the profits they make a pass through to the owners and end up being taxed at individual income tax rates. If you have a sole proprietorship, partnership, S-corp, or limited liability company, then your business is probably a pass-through entity. However, with the reduction of the corporate tax rate to 21% via the Tax Cuts and Jobs Act (TCJA) of 2017, the idea of a C corporation may be more appealing to those who would otherwise form a pass-through business. After all, when you start doing tax planning for your small business, doesn’t a 21% corporate rate look more attractive than the maximum individual rat...