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Six months following the enactment of the Tax Cuts and Jobs Act of 2018, many questions still remain unanswered regarding the implementation of the new law. However, tax planning is a fluid process and the time is ripe to revisit many new provisions. In 2018, the corporate tax rate was lowered from 35 percent to 21 percent which is significantly lower than the top individual tax rate of 37 percent. On its face, it would seem that being taxed as a C corporation may make the most sense, but actually it is the starting point of the evaluation process to determine the best choice of entity. Many different factors should be considered including: 

  • The nature of your business - is it in the startup or growth phase where earnings will be retained?
  • Would your business qualify for the 20 percent flow-through deduction under Section 199A?
  • Are you considering an exit strategy in the near future?
  • Does your business have foreign operations?
  • Do state taxes figure prominently in your operations?

While not exhaustive, these are just a few of the considerations that should be discussed when considering the best choice of entity from a taxation perspective. For more information, contact us in one of our many locations