One aspect I haven’t seen mentioned in the comments or in the article: double taxation. One of the drawbacks of structuring a business as a c-corp is that you have double taxation: once, at the corporate rate then again at the individual income tax rate if the corporation distributed earnings to shareholders. An advantage of that, however, is that if you’re investing for the future, double taxation can be more efficient. If my business makes $100 before taxes, I can reinvest about $80 for future growth if it’s a c-Corp but if it’s a pass-through entity (like an LLC or S-Corp designated as a pass-through), I may only be able to invest $60 because I pay ordinary income rates on earnings.
Put another way: in the steady-state, corporate shareholders end up paying big taxes because distributions are taxed once again at ordinary income rates.
Put another way: in the steady-state, corporate shareholders end up paying big taxes because distributions are taxed once again at ordinary income rates.