Opinions expressed by Entrepreneur contributors are their own. If you’re confused about what type of business entity to set up — entrepreneur or contractor — under the new Tax Cuts & Jobs Act of 2017, you’re not alone. Whether you’re an Uber driver, tech startup founder or medical professional […]

contractor, you’ll find that the new tax law will significantly impact your 2018 returns. So, don’t waste any more time mulling this question because you have only a few months left to make changes that will affect your 2018 tax liability.

And that’s worth noting, because, with the right tax strategy, you can save up to 10 percent to 40 percent on your taxes, permanently. So, as an entrepreneur, you should talk to a tax advisor about whether you want to be taxed as self-employed, an “S” Corp, “C” Corp or partnership.

Bottom line: If you have the right entity setup, you’ll pay less tax.

The biggest tax changes in the new law for small business owners are the lower corporate tax rate of 21 percent and a potential 20 percent pass-through deduction that starts in 2018 for self-employed, sole proprietors, partnerships and S corporations.

For service businesses involving categories like doctors, lawyers and financial advisors, the taxable income of the professional involved, according to the IRS, must be below $207,500 (for a single individual) or $415,000 (married, and filing jointly) for that person to qualify.

 

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