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How Optimistic Should You Be This Tax Season? Ask Your Accounting Firm

February 28, 2019 //  by Contributor

The 2019 tax season marks the first time your small Nashville business will file returns under the reforms instituted through the Tax Cuts and Jobs Act of 2017. This means you could enjoy higher deductions or savings, given the new federal tax provisions. For example:

  • Small businesses structured as sole proprietorships, partnerships, limited liability companies, and S-corporations (otherwise known as “pass-through” companies) will now get a 20% deduction.
  • Deductions for eligible equipment and property purchases from here on can be claimed at 100% instead of 50%. Eligible property can also now mean used-item purchases.
  • Net operating losses, another form of tax relief, can now be applied to future tax payments.

Let Your Accounting Firm Detail the Impact of Business Tax Reforms

Such provisions have given many small-scale entrepreneurs cause for optimism. In fact, 83% believe the tax reforms will have a positive impact on their businesses, according to a survey of 2,700 small business owners conducted last year. Owners also said they will funnel their savings towards business growth:

  • 38% will hire new employees
  • 28% will invest in research, development, or new technology
  • 26% will offer new services
  • 21% will expand or open a new office/location

They also plan to improve employee benefits: 10% will offer new ones, while 13% will give bonuses.

But how bullish should you be with your own business moving forward?

A need for caution and clarity

Only a close examination of your current tax requirements—and financial health—will tell you how exactly you should steer your company. As Keith Hall, the president of the National Association for the Self Employed, points out:

The nation’s new tax code is based on the simple principle of small businesses reinvesting their tax savings directly back into their day-to-day business operations… However, it is understandably difficult for the small business owner to invest in new opportunities or to create that extra job when they are still unclear on exactly how much in tax savings that will actually be realized.

To help deal with the situation, your trusted accounting firm will have to break down how much you can recoup in tax savings this year thanks to the nationwide reforms, and help you assess your finances to make decisions for the future.

You may also need their advice on tax planning vis-à-vis legislation farther down the road. Note that legislation within Tennessee itself can change. Last year, in reaction to national reforms, state lawmakers proposed a bill that would spare corporations from a rise in state taxes triggered by the federal laws. Tennessee also recently made moves to become a no-income-tax state by 2021. Developments in these areas will surely impact investors, consumers, and entrepreneurs alike.

For any questions about how legislation affects your tax returns this year or the next, as well as any other concerns about tax filing, consult Evan Hutcheson, CPA, LLC.

Sources:

Small Business Taxes: What to Expect in 2019, BusinessNewsDaily.com
Tax Reform Changes That Impact Your 2018 Taxes, TurboTax.com
83% of Small Business Owners Optimistic About New Tax Bill, Insureon.com
Tax reform a win? Small business still anxious, unsure, FoxBusiness.com

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Category: Accounting FirmTag: Nashville Accounting Firm

Previous Post: «Navigate the Shutdown’s Effects with Help from Your Nashville CPA The Government Shutdown: How It Affects Your Nashville Business and How a CPA Can Help
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