Whether you are interested in changing the classification of your business or you are just getting started, it is essential to know the benefits of each type of corporation. Often, new business owners will jump to one decision with little information, or they stay with what they have because it is easier than making a change.
In recent years, some of the tax rules regarding corporations have changed, and it could be to your benefit to make changes to your own business.
Here are some of the recent changes that may make a C corporation a better option than an LLC.
Recent tax changes
In January 2018, there were important changes in the tax code when it comes to how you organize and license your business. Before 2018, C corporations had graduated tax rates, meaning the more profit they made, the higher the tax percentage.
Then, changes also brought an end to the 20% alternative minimum tax (AMT). Previously, if the AMT was higher than their regular tax rate, C corporations had to pay the AMT.
Looking into the future
While there is a certain degree of flexibility in choosing to organize your business as an LLC, the C corporation may have the best long-term potential for your business. C corporations have a wide range of potential deduction and expense claims.
Consider whether the future of your business will include offering employee benefits such as medical reimbursement. As a C corporation, you would be able to deduct the cost of many of the benefits you offer your employees.
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