Archive for February, 2018

The New Tax Bill Is Positive For SMBs

February 6, 2018

Experts are still dissecting the most extensive rewrite to the U.S. tax code in 30 years.

What is becoming clear is that on the whole small businesses will net a great many benefits from these new legal provisions.

Every small business should consult their accounting professional for individual guidance. However, there are five major issues that SMBs must stay on top of under the tax landscape.

  1. Choose your company structure carefully.

This concern is based on whether there is a need to retain working capital and the distribution needs of the owners.  Along with these concerns is how the company will look to a potential buyer.

  1. Smaller firms have different considerations than larger firms.

Smaller firms will benefit from passing cash through to owners while larger firms will see ways of shielding income and bringing back overseas monies.  In this case size matters so check with a tax professional.

  1. Tax savings are an opportunity to grow your business.

As the bill intended, there are good reasons for SMBs to invest in growth.  So even the smallest firms should broaden plans to include longer time horizons.

  1. Take advantage of estate tax exemptions.

For estate planning purposes the exemptions have doubled but have a sunset of 2026.  In this case, are you betting you will die before the exemptions expire?

  1. Beware of unintended consequences of the legislation.

Congress limited interest expense to 30% of adjusted income, a difficult barrier for companies in hyper-expansion mode.  Perhaps as a swipe to new age or millennium companies, it also reduced to 50% the deduction for providing food to employees.  It phases out entirely in 2025.

Surveys have shown the changes are popular with SMBs.  In fact, the latest public soundings show Americans in general warming up to the new tax bill.

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