Business owners in and around Chicago or Detroit know that they have to watch their bottom line and many things go into this. Taxes are one of the factors that can make a big difference to a company's profitability and vice versa. In light of the new tax law that went into effect this year, some companies might be looking at making some changes to take maximum advantage of the law or to avoid paying even more tax.
As explained by Inc. Magazine, until this year, many people found it advantageous from a tax perspective to create limited liability companies or S corporations instead of C corporations. Today, however, many may be re-evaluating this decision and might even be considering converting their LLCs or S corporations to C corporations. Doing so would give them the ability to enjoy the dramatically reduced corporate tax rate.
However, experts urge entrepreneurs and business owners to proceed carefully before making this switch. It is important to calculate the savings one might enjoy in lower taxes and then also to look at the costs involved in moving to a C corporation. The difference may not make the change so attractive in the end.
CNBC reports that many pass-through companies may be better off investigating creative ways of taking advantage of the 20 percent deduction designed for their businesses. There are strict income limits for these owners which may force some people to find unique ways of being below these limits such as putting more money away in retirement.