Best legal structure in the new tax code

2 Replies

Does anybody know what the best legal structure for liability protection and tax benefits under the new tax code?

I'm under the impression an s or c-corp may be better than an LLC right now because of the lower tax rate.

@Kevin Wolski

Like many answers to tax questions "it depends"

First and foremost - S-Corp is a pass-through entity and does not necessarily have a tax rate bracket. However, the shareholders of an S-corp may benefit from the new 20% pass-through deduction.

C-Corps do have an overall lower top tax rate of 21%. However, that is a fixed rate and does not benefit from the lower 10% & 15% that it previously had.

You should reach out to an accountant to see what mixture of entities(if any are required) would best suit your needs.

Basit Siddiqi, CPA
917-280-8544
Originally posted by @Kevin Wolski :

Does anybody know what the best legal structure for liability protection and tax benefits under the new tax code?

I'm under the impression an s or c-corp may be better than an LLC right now because of the lower tax rate.

You cannot compare LLC v. Corporations. LLC does not have its own method of taxation and can choose how to be taxed, which includes:

  1. disregarded entity = sole proprietorship = no entity
  2. S-corporation
  3. partnership (if more than one owner)
  4. C-corporation

#1, #2 and #3 all use the exact same tax rates and are taxed more-or-less the same way under the new tax law.

#4 is treated differently, but is a very complicated structure not recommended without custom professional advice.

There is no "best" structure anyway, just like there is no best diet and no best job. To determine what is best for you, you'd need to discuss it with a tax expert.

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