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Tax Changes Affecting Businesses

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By Debbie Hogan

This time last year, we reminded our clients about the Federal Tax overhaul about to take place. One year into the new tax laws, which took effect January 1, 2018, is a good time to reflect and determine if your business has taken advantage of the changes that affect your business and industry. The goal of the tax laws were to help small businesses grow, invest and create jobs. As you prepare your finances for 4th quarter in anticipation of another year of taxes, do an assessment.

If you run a pass-through business, your tax rate should have dropped to 29.6%. Check?

Qualified personal property you purchased for your business should have become fully deductible. Check?

Perhaps this may be the time to acquire that new company car, computer system, phone system or office space before the start of 2019.

Other changes have great impact but are lesser known except to accounting professionals. One new rule is that growing businesses don’t have to switch to the accrual accounting method until their revenues reach 25 million. Previously cash basis tax reporters, had to switch once revenues reach 5 million.

If your business was still recovering from the economy slump, you may benefit from the new law that allows businesses to offset 80% of their taxable income in future years with net operating losses incurred this year (NOL). This benefit extends indefinitely rather than for a fixed period of years. Net operating losses are when operating costs exceed revenue in a given year on your business tax return.

To learn how the new tax law directly affects your business, set up some time with your accountant now, before the rush, to discuss the tax strategies that may benefit you if implemented before the end of 2018. New strategies that you implement may need to be documented in the Company minutes so be sure to set a time with your attorneys at The Hogan Law Firm for your annual corporate meeting to properly document any plans implemented or intended. This is required for Corporations and Limited Liability Company’s. It’s not too late to get appropriate matters correctly documented before tax season!

We look forward to speaking with you.