As tax season gets into gear, many small businesses will be adjusting to the major tax legislation passed in December 2017 and implemented in 2018.
As a small business, Business Solutions Unlimited makes it a point to stay up to date on current tax laws. That way we ensure we’re paying the right amount each year—plus reduce the impact of surprises that could impact our finances when the tax bill comes due.
While we don’t promote tax services as part of our virtual assistance services, we like to help keep other small businesses informed about tax issues.
So, let’s explore some of the tax matters that could impact your business this year.
Reduction of Corporate Tax Rate
C Corporations pay a flat 21%, reduced from a previous rate of 35%. While that’s great for some businesses, the elimination of the lower 15% corporate rate means some businesses will be paying the higher 21% rate this year.
Tax Relief for Pass-through Businesses
Sole proprietors may qualify for a 20% pass-through deduction of their QBI, qualified business income. Exceptions apply for businesses in the following industries:
- Actuarial Sciences
- Financial Services
- Brokerage Services
- Performing Arts
- Specified Service Trades/Business: Trade or business where principal asset is the skill of one or more employees
Entertainment & Meal Write-offs
In years past, businesses could write-off pretty much any entertainment expenses related to their business. Not anymore. The new tax law removed that option. However, taking clients out to dinner or bringing meals in for employees is still deductible.
Business Mileage Rates
Business standard mileage rate is 54.5 cents per mile. Businesses have a choice between standard mileage deductions and 50% of your actual driving expenses (gas, insurance, parking, tolls, repairs, etc). Most experts recommend business use the:
- Standard mileage rate if driving less than 50% for business
- Actual expenses if driving more than 50% for your business
Deductions (Section 179) on business asset purchases increased. That means you can deduct up to $1 million on qualifying assets purchased and placed into service after September 27, 2017. In many cases, this could be 100% of the cost of your purchase.
Bonus depreciation increased from 50% to 100% for qualified property purchased and placed into service after September 27, 2017.
Businesses that provide paid or medical leave to employees can get a temporary credit equal to 12.5% of the amount of wages paid during the leave.
Where to Get Answers on Small Business Taxes
It’s always good to go to the actual source when seeking information. That’s why we recommend going to this IRS webpage dedicated to how tax reform provisions affect businesses.
Too Busy? Delegate Your Tasks
As QuickBooks ProAdvisors we can help you by providing experienced bookkeeping services and working with your tax preparer, saving you time and money. Feel free to give us a call at (904) 429-4588 to discuss this service and many more we offer to help you delegate time-consuming tasks while maintaining low overhead.