Closely Held Businesses

The new 20% business income deduction is creating a buzz for businesses that choose a pass-through tax structure. Sub Chapter S (S-Corp), the tax structure that allows a business to be taxed as a partnership is popular among closely held businesses. The tax treatment differs from C-corp taxation. In an S-Corp, business income and deductions generally “pass-through” from the business to the shareholders to be taxed at the individual level. Thus, a strong S-Corp attraction remains its potential to avoid “double taxation” of the C corporation and the equally dreaded self-employment tax of the sole proprietorship. Creating a tax saving vehicle for closely held businesses. S-Corp taxation is the most advantageous taxation for many closely held businesses, but not all. At least through 2025. More with SoundCPA Insights for Business.