Closely Held Business Owners (Current Operation) Goals and Type of Entity and Things They Should Consider Achieving
Tax efficient choice of entity (short term)
Business owners entity choice and tax planning. Start with a discussion of what the business owner’s gals and exit strategy are.
What are concerns on day to day business matters?
C corporation is 21% and top individual rate is 37%.
Do you get the 199A deduction, the rate is reduced to 29.6%?
Certain industries tend to have certain types of entities, e.g. real estate has partnership. Understanding the business and owners can lead to a choice of one type of entity being preferred over the others.
With charities and foreign investors, you might favor a C corporation structure since you cannot have an S corporation for these types of shareholders. If there are foreign partners in a partnership you have withholding taxes on foreign partners whether or not it is distributed.
If you can operate so building the business and reinvesting the profits in the business and your ultimate exit strategy is to sell stock, you might benefit from a C corporation.
If you are going to distribute profits to a shareholder on an annual basis C corporation is less advantageous as you will face double taxation.
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