Small business owners may benefit from kinder tax treatment under the new law. They should think twice before becoming incorporated.
The Tax Cuts and Jobs Act offers a 20 percent deduction for qualified business income from so-called pass-through entities, which include S corporations and limited liability companies.
Under the "old" tax code, income from these small businesses would "pass-through" to the owner on her own taxes and were subject to individual income tax rates as high as 39.6 percent.
Now, entrepreneurs are subject to a tax break on the income their businesses generate, but many of them face a key decision: Is it now time to incorporate — and if so, what entity should you choose?