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Author Topic: Tax Law Favors S-Corps & LLCs  (Read 583 times)

benali72

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Tax Law Favors S-Corps & LLCs
« on: December 14, 2017, 04:02:08 pm »
The new tax tax (assuming it passes) favors S-Corps and LLCs.  Pass-thru taxes are less than individual taxes.

So if you have the option and haven't incorporated, you should seriously research this.

See http://slate.com/business/2017/12/why-youll-want-to-turn-yourself-into-a-business-under-the-republican-tax-plan.html
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G0ddard B0lt

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Re: Tax Law Favors S-Corps & LLCs
« Reply #1 on: December 17, 2017, 11:25:22 pm »
Gee, now they'll need a rebooted "Section 1706" to screw over solo entrepreneurs who take advantage of this.  >:(

It sounds great as long as the little guy doesn't get targeted once again.

I kinda wonder if Trump, being uber-business, is trying to kickstart the formation of small businesses.
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benali72

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Re: Tax Law Favors S-Corps & LLCs
« Reply #2 on: December 18, 2017, 11:21:23 pm »
Quote from: The Gorn on December 17, 2017, 11:25:22 pm
I kinda wonder if Trump, being uber-business, is trying to kickstart the formation of small businesses.

I've seen cynical articles that claim this provision is mainly intended as a tax dodge for well-off people to reduce their income taxes by questionable incorporation.

I've also seen many people say that this would legitimately help people who operate small businesses  by encouraging them to incorporate as Sub-S or LLC and gain tax breaks.

Who knows which view is accurate? I sure don't.

All we know for sure is that the tax bill definitely helps large C corporations by cutting their taxes, while not imposing any obligations on them for how they will use this money.
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benali72

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Re: Tax Law Favors S-Corps & LLCs
« Reply #3 on: December 19, 2017, 05:15:43 pm »
From the NYT --   (www.nytimes.com/interactive/2017/12/12/upshot/tax-hacks.html)

"If you run a pass-through business that earns up to $157,500 a year if you’re single ($315,000 if you’re married), you get a 21 percent tax break on all profit that comes through your company — in other words, only 80 percent of that income would be taxed. That might make it worthwhile for some workers to switch from salaried work to freelance, though there are a few complications, like obtaining health insurance and getting your employer to agree. Those earning more might still be better off as a pass-through, but there are more rules about what types of income qualify for the deduction.

This shift is something that actually happened. In 2012, Kansas instituted even more generous pass-through rules, leading many people — perhaps 1 out of every 500 workers — to persuade their employers to pay them this way."


Be interesting to see if the new federal tax bill follows this. If so, we might have more S-corps and LLCs, as in Kansas...
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G0ddard B0lt

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Re: Tax Law Favors S-Corps & LLCs
« Reply #4 on: December 19, 2017, 05:39:03 pm »
Quote from: benali72 on December 19, 2017, 05:15:43 pm
If you run a pass-through business that earns up to $157,500 a year if you’re single ($315,000 if you’re married), you get a 21 percent tax break on all profit that comes through your company — in other words, only 80 percent of that income would be taxed. That might make it worthwhile for some workers to switch from salaried work to freelance, though there are a few complications, like obtaining health insurance and getting your employer to agree. Those earning more might still be better off as a pass-through, but there are more rules about what types of income qualify for the deduction.

This is exactly the aspect that makes me wonder if Trump is actually keeping his eye on the little guy. $300K revenue is still small potatoes in the grand scheme of things.
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