Entrepreneurs often struggle with deciding whether to structure their business as a C corporation or a pass-through entity. In the past, most small and mid-sized businesses were established as a pass-through entity, a structure that transmits tax liability to the owner. Typical pass-through entities include sole proprietorships, partnerships and S corporations.
However, the tax landscape changed with passage of the Tax Cuts and Jobs Act (TCJA). Beginning with tax years 2018 and beyond, it reduced the corporate tax rate from 35% to 21%, thus making the C corporation structure more attractive.