The Tax Cuts and Jobs Act taken together have many business owners considering converting their business from a pass-through entity to a C corporation in order to take advantage of the 21-percent tax rate for corporations. Although there are several reasons not to convert to a C corporation, the owner of a Florida business would likely suffer an additional detriment by doing so due to state tax laws.

A C corporation is a corporation which has not made a subchapter S election. A “C” corporation pays income taxes itself, at the new reduced 21-percent tax rate. On the other hand, the owners of businesses structured as a pass-through entity—either an S corporation, partnership, LLC or sole proprietorship—pay tax on their share of the company’s income at the higher tax rate for individuals—up to a top tax bracket of 37 percent under the new tax law.