Revisiting Entity Choice for Small Business Owners
Hyatt, Venita R.
Washburn University. School of Business
Kaw Valley Bank
Recent changes and proposed changes in federal tax laws may affect the important decision about which entity to choose when starting a small business. Reduction in the rate of tax on dividends to 15 percent has lessened the impact of double taxation of corporate income under Subsection C of the Internal Revenue Code. The Treasury Department's recent statement of support for proposals that reduce complexity in tax laws governing Subchapter S may make that entity choice more appealing than those taxed under complex partnership laws. This article will provide an overview of several business entity forms from tax and legal perspectives.