Closely Held Business Owners (Current Operation) Goals and Type of Entity and Things They Should Consider Achieving

 

1. 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.