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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