Know How the New Tax Code Affects Your Business

Know How the New Tax Code

Affects Your Business

As the dust settles on the new tax law, small and medium business (SMB) owners should consider important tax planning opportunities. You can maximize tax savings to grow your business and create jobs.*

Ensuring you, as a business owner, minimize your taxes requires careful consideration and proactive planning. Although the tax bill eliminates many credits and incentives, it also keeps other significant ones. A few examples include:

Changes for business owners organized as passthroughs. A 20% deduction is now in place for qualified business income for pass-through entities (S corporations and LLCs). In the past, income from these types of small businesses would "passthrough" to the company owner. The new tax code may spur change for you! We’re here to help you navigate what’s best for you and your business—based on this change.

Changes to accounting methods. The threshold to use cash accounting has changed from $5 million to $25 million. (That’s determined as a three-year average of annual gross receipts.) You’ll want to know about that and other key accounting changes; they could provide more choices as you grow your business.

Cut-backs on deductions. The new tax laws limit deductions for state and local taxes (up to $10,000), as well as interest on mortgage debt (capped at debt that’s more than $750,000, going forward), among other notable changes. We look forward to working closely with you, and help you better understand the tax law and how these cut-backs may influence future business decisions.

These are just three, simplified examples. There are many more changes we want you to know about. Give us a call, for peace of mind about maximizing your potential savings at the federal and state level.

Give Us a Call

As you’re prepping for this year’s taxes, plan for how tax reform affects you and your company next year. Call us at 513.576.1989.

Parents, here’s a tip based on the new tax code: If your child is planning on working and will make less than $12,000 in 2018, have them ask their employer to not withhold any federal taxes, based on the new standard deduction. That way, they won’t have to file federal taxes and they won’t have to wait for those tax returns!

*Reference: Forbes , Dean Zerbe, JAN 10, 2018

Our national net worth, defined as assets minus liabilities, rose by $1.7 trillion in the second quarter of 2017 to $96.2 trillion, according to the Federal Reserve. That’s the good news. Not so good news? Consumer credit grew at an annual rate of 4.6% for the same period. Better news? State and local government debt decreased by 1%.

Our newsletter offers financial “news you can use”. This month features:

Small Business Owners

When saving money for your retirement as a sole proprietor, consider a Simplified Employee Pension (SEP) plan . Depending on your business, you could build a sizable nest egg. Benefits include its low maintenance, combined with the plan’s high contribution limits.

If you have employees, a SEP plan is likely not right for you. Give us a call. We can help you minimize taxes, and take advantage of a retirement plan appropriate for your business.