"I own a firm dedicated to business optimization. Since the passage of the " One Big Beautiful Bill Act," or OBBBA, I'm now more inclined than ever to advise my larger and more growth-focused clients to consider the C corporation over other popular entity types such as LLCs and S corporations. That said, for smaller businesses and owners who rely year-by-year on their business profits for personal living expenses, the LLC or S corporation may still be the right fit for maximum tax savings."
"In order to understand the impact of the new law and what it means for your business, it's important to understand "pass-through income." If you have an LLC, sole proprietorship, partnership or an S corporation that makes money this year, you can rest assured you will be taxed on that income. Your profits pass through from your business and are taxed as individual income."
"Now, if your C corporation issues a dividend or you sell your shares, then the money you receive counts as individual income and is taxed as such. But here's the thing, no one can force you to issue a dividend or sell shares in your company. Plenty of C corporation owners reinvest most or all of their profits back into their business. And why shouldn't they? Especially now, given that the OBBBA incentivizes you to do just that."
The OBBBA shifts incentives toward C corporations for larger, growth-focused businesses by favoring corporate-level taxation and reinvestment. Pass-through entities such as LLCs, sole proprietorships, partnerships and S corporations pass profits to owners and tax those profits as individual income. C corporations pay tax at the corporate level and need not distribute profits as dividends, allowing owners to defer individual taxation by reinvesting earnings. No one can force dividend distributions, so owners can retain earnings inside the company. Corporate tax historically reached 35% prior to 2018, but corporate rates are now lower than top individual income tax rates.
Read at Entrepreneur
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