Section 199A has created additional planning opportunities (and headaches) as to whether clients should be doing business as either an S corporation or as an LLC. Choosing either LLC or S Corp status will also impact the employment and Medicare taxes which need to be taken into account.
However, there are a multitude of business and tax distinctions which result from doing business as either an LLC or as an S corporation which should not be overlooked. Often times, these other factors will prove more important than maximizing the Section 199A deduction.
HIGHLIGHTS
Key discussion topics:
- What tax advantages does the LLC offer when you are trying to attract equity investors to invest your company?
- What are the different tax consequences to take into consideration for LLCs and S Corporations where the entity incurs debt?
- Why is the LLC a preferable alternative if you want to offer employees an opportunity to become equity owners, especially if the employees don’t have proceeds to purchase ownership in the business?
- How does an S Corporation provide greater income tax protection to the equity owners than an LLC when the Company experiences financial difficulties.
- Owners of businesses located in NJ may be able to avoid state income tax if they are able to convince the prospective buyer to purchase the entity rather than do an asset sale. The LLC provides greater opportunity to entice a buyer to acquire the entity rather than do an asset purchase.