Tax Reform and what it means for small businesses
The Tax Reform – The Tax Cuts and Jobs Act, enacted in December 2017, affects nearly every business and individual in 2018 and the years ahead. As a small business or self-employed taxpayer, you should understand how the new tax law could affect your bottom line and how the changes for individuals relate to your business situation. Other than the suspension of section 212, here are some changes that you should be aware of.
Limits On Meals and Entertainment Deductions –The Tax Cuts and Jobs Act partially eliminated the deduction for any expenses related to activities considered entertainment, amusement or recreation. However, under the new law, taxpayers can continue to deduct 50% of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant.
Qualified Business Deduction –Eligible taxpayers may now deduct up to 20 percent of certain business income from domestic businesses operated as sole proprietorships or through partnerships, S corporations, trusts, and estates. Eligible taxpayers can claim the deduction for the first time on the 2018 federal income tax return they file in 2019. This is a huge tax deduction for small businesses. Make sure to ask your CPA about the Qualified Business Deduction!
SALT DEDUCTIONS – The new tax plan instituted a cap on the SALT deduction. The SALT deduction Starting with the 2018 tax year, the maximum SALT deduction available is $10,000. Previously, there was no limit. This new cap on SALT Deductions can hinder the amount a business can lower its taxable income.
The CPA’s of Prime Corporate Services are here to make sure you are educated and up to date on the new tax laws. We are confident we can help you save as much as possible on your business and personal taxes. Sign up for a consultation today to see how we can help!