Upcoming tax law adjustments could significantly impact clients’ business structure decisions.
We are anticipating changes to tax laws that could significantly impact clients, either positively or negatively, depending on the structure of their businesses.
One major consideration is the type of business entity the client operates. The options include sole proprietorships, partnerships, and corporations. Within corporations, there are further distinctions: C corporations or those that have made an S election.
For limited liability entities, clients may choose to have the entity taxed as a partnership, sole proprietorship, or corporation by making the appropriate elections, such as the “check-the-box” election or an S election.
Many of these choices were influenced by the Tax Cuts and Jobs Act (TCJA). For instance, the reduction in the corporate tax rate from 35% to 21% created a strong incentive for businesses to consider the …