The U.S. tax code has more than its share of complications. This was the case even before the $1.7 trillion structural overhaul passed by Congress at the end of 2017. With all this complexity, it’s no wonder that many small business owners don’t fully understand the implications of the 2017 Tax Cuts and Jobs Act.
Numbers House, which provides bookkeeping, tax advice, and payroll services, can help entrepreneurs boil it down to the basics and identify the provisions that are most beneficial to your small business.
Here are five benefits and other things to keep in mind when you file your 2018 business taxes:
- Taxable income. Pass-through businesses such as corporations and limited liability companies (LLCs) can now deduct 20 percent of taxable income. The provision offers less relief to service-based companies, which can deduct the 20 percent only if annual income is less than $315,000.
- Corporate tax rate. The tax overhaul lowered the corporate tax rate to 21 percent from 35 percent. The intent is to discourage corporations from moving overseas, and for businesses to reinvest the tax savings back into the company.
- Higher interest rates. As more capital presumably enters the economy, the Federal Reserve will likely continue to increase interest rates. This can mean higher loan rates on company capital investments or expansions. The new tax code, however, contains a provision allowing for small businesses to write off loan interest.
- Property and equipment deductions. The tax changes will now allow for deductions of $1 million in equipment and property purchases, nearly double the previous rate.
- Overseas taxation. The act eliminates the tax liability on income generated by overseas operations.
The act also strengthens accountability requirements for nonprofit entities such as charities, churches and other nonprofits — yet another area in which Numbers House can help.
While the Tax Cuts and Jobs Act will certainly bring its share of benefits to companies and businesses of all sizes, you need professionals to help identify and secure the options for reducing your tax liability. Contact The Numbers House today for a thorough assessment and explanation of how the tax code can affect your company, and let the money roll in. Call Numbers House at (865) 294-7300 or email us at email@example.com.