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How does the type of corporation affect taxes?

When someone is pursuing a dream, she or he is more likely to succeed if planning is involved. It is the same when someone is chasing a good business opportunity, and it is especially true when both are the case. Although it may seem insignificant for small businesses, the type chosen for a company or corporation can save vital assets and resources from taxes and liability.

How has 2018 affected the taxation of corporations?

As one may expect, larger businesses have made the largest gains because corporate tax rates have been reduced from their previous levels. But there are some important changes for self-employed people and owners of smaller businesses.

What are the updates that matter most to smaller companies?

There is a pass-through deduction on income for self-employed people, freelancing professionals, sole proprietorships, partnerships and S corporations. An S corporation often pays no tax as an entity itself, but assets and liabilities are shared out to the partners or shareholders. Accountants report this new deduction may reduce tax bills by as much as 20 percent.

What about C corporations?

C corporations, which are often publicly owned and traded or planned to be in the future, have higher shareholder counts or no limits at all. Some startup companies may consider becoming a "C-corp," as there are also generous provisions for stock after five years of ownership.

How do I create or change the form of a business?

An attorney can help with the many steps that are required for a new or altered business in California. Legal representation takes the pressure off entrepreneurs and investors to meet every detail and deadline.

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