Avoid An Ugly Holiday Sweater for Your Business
Don’t let your small business be stuck in an ugly exterior. Make sure you are operating under the business structure that is ideal for your business’ goals. The newly passed tax changes that take place as of January 1, 2018 have an effect on all small business owners. Luckily, most of the effects will be positive, allowing for unprecedented increases in deductions for pass-through entities (LLCs and S Corporations) and a lowered tax rate for C Corporations. The new tax changes are complicated and could affect how and whether you draw a salary from your pass-through entity.Every small business is different. Whether or not you should operate as an S Corporation, C Corporation, or LLC is based on an analysis of who your owners are (for example, non-citizens cannot be S Corporation shareholders), whether you have employees, whether the business owners work for the business, whether your business is debt heavy, the level of your business’s income relative to the salary an owner would draw, and the state that your business is in. There is no benefit to operating as a sole proprietor.
It is possible that you may need to change your business entity structure or income structure, to take the best advantage of the new tax laws. Contact your trusted tax advisor before January 1, 2018. If you need a tax accountant referral or if you need assistance filing entity formation documents, contact Donaldson Legal Counseling PLLC at email@example.com or (301) 332-2354.