Business Tax Planning

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2019 may not see major changes to the small business tax code, but there are some important things to keep in mind.

Last year, Congress introduced some major adjustments to business tax law, including a lower corporate tax rate, new rules for pass-through businesses and a tax break for some industries.

We'll give you seven tax strategies that may work out for your situation.

Are you having trouble collecting money for goods or services your business has provided?

This adjustment means your taxes could be different from last year.

If you're a small business operating domestically, Anthony Parent, founding partner of Parent & Parent LLP, said you should experience mostly positive changes.The noteworthy changes include deductions for pass throughs, first-year bonus depreciation and net operating loss changes. The new bill provides a 20 percent deduction for all of those businesses.The biggest change all businesses are facing this year is a significant deduction for both pass-through and corporate entities. The only limitation is on service-based businesses, like law and accounting firms making more than 5,000 per year (7,500 if single)."A company can invest in vehicles, computers and equipment, and claim the entire expense on their 2018 tax return." Winegarden said the break is an incentive for businesses to spend more."Anything that gets you closer to complete expensing is going to increase the value of the depreciation, lower the tax burden and reward those capital-intensive firms," he said.This can only be applied to 80 percent of taxable income.Winegarden said the thinking behind this change is to incentivize businesses to take risks and spend more money.It functions as a form of tax relief for businesses, where business owners can apply a NOL to future tax payments.The change eliminates the ability for businesses to restructure taxes completed in years past, but it extends net operating losses' lifespan indefinitely."People haven't seen most of the impact of it yet, and you're not going to see it until next year," Parent said."This is really when you're going to get surprised – sometimes for good, sometimes for bad.


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