The Small Business Marathon: Training and Planning for a Successful Finish

Experienced runners would never embark on a marathon without adequate training. Taking on this physical and mental long distance feat shouldn’t be entered into lightly and without defined strategies for how to cross the finish line. The same can be said for the challenges small business owners face, which include launching, operating, growing and ultimately exiting their ventures at the end of their careers. Unfortunately, many business owners fail to thoroughly prepare for the last stage of the marathon – a successful sale or transition.

C Corps Are Still Likely to be Costlier in an Asset Sale

The 2017 Tax Cuts and Jobs Act established for 2018 a new flat 21% federal income tax rate for C corporations (“C Corps”). This 21% rate is significantly lower than the 2017 top C Corp. rate of 35% and the new 2018 individual tax rate of 37% which would apply to ordinary income from pass-through entities such as partnerships or S corporations (“S Corp”).

So, shouldn’t all companies now opt to be taxed as C Corps? Not so fast.