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Small Business 2018 Tax Reform Tips

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Steven E Miller, CPA PC

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2018 Tax Reform

Written by Steven Miller, CPA       June 20, 2018

With the passing of the TCJA Tax Reform Act on December 22, 2017, significant changes to the tax code are impacting all businesses and their owners.  Without getting too buried in the details, every small business owner should take the time to explore how they are going to be impacted by this new law. 

Ignoring the Tax Reform Act changes could cost you a lot of money.

Here are a few items for consideration

·       Consider Restructuring

The new 20% tax deduction for owners of many pass-through businesses is a game changer. 

Are you positioned to take full advantage? 

LLC members, S corporation shareholders, sole proprietors, partners in partnerships and trusts may qualify for the deduction, or not. 

Changing the tax structure of your business may help you or hurt you.  And the answer varies for each owner.

·       Expense those new assets

The new law allows the expensing of “100% bonus depreciation” through 2022.  A business can write off the entire cost of many types of assets in the year put in service. 

But, expensing might limit or eliminate that 20% deduction mentioned earlier.

·       Lost Deductions

TCJA eliminated a lot of deductions under the guise of “tax simplification.” 

If you are incurring these deductions, look to strategize on how to limit them going forward.  You bear the full brunt of their cost with no tax benefit. 

Entertainment deductions, investment advisory expenses, moving expenses, and 2% miscellaneous itemized deductions have been eliminated.  Costs of meals is limited. Deductions for state and local income taxes may be severely limited or eliminated.

·       Keep Good Books & Records

So many small businesses discount the value of good record keeping. 

Working on the cheap usually costs you lost deductions which typically is much more expensive than having some professional accounting help. 

It is almost impossible to plan without good financial information.  Accurate books lead to accurate tax returns.  Tax return errors often lead to stiff penalties by the IRS.

If you are looking to simplify your business processes, I suggest employing financial technology, so you work smarter rather than harder. If you are looking for long-term tax strategies, perhaps give us a call.

Tax Planning Is More Like Running A Marathon

 Than Running A Sprint

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