Business Owners: Top 5 Tax Issues to Consider This Tax Season
Let’s get REAL! Most tax related updates you read are intended to be written for the general public but are full of language and acronyms that only tax professionals really understand. If you are reading this post, you are most likely not a tax professional and you need some guidance as it relates to the Trump Tax Bill that affects the tax returns you will be filing this year. So, let’s get started.
Listed below are the top five areas business owners should consider along with some potential questions needing answers from their tax professionals this tax season:
20% Pass-Through Deduction
Have you heard about “QBI” or a “20% Deduction?” Are you wondering what they mean and how they apply?
New for 2018 are rules that allow for certain businesses that generate qualifying income to produce a 20% deduction that may be deductible on each individual partner’s or shareholder’s income tax return. The decisions made by you or your tax professional at the business level will impact the possible deductions at the partner or shareholder level.
- Does the 20% deduction on income generated by partnerships, S-corporations, and sole proprietorships apply to your business and who actually takes the potential deduction?
- Does your business generate qualifying income and potentially have qualified W-2 wages and property?
- How do S-corporation shareholder wages and partner guaranteed payments affect the overall 20% business deduction?
- What do you need to know if you operate your business as a sole proprietorship and have no qualifying W-2 wages to report?
Entity Selection
Are you starting a new business or re-thinking your current one?
Choosing the right entity type for your long-term business plans is one of the most important considerations given the new tax laws and how they affect businesses both large and small.
- Which tax entity type makes the most sense for your business moving forward?
- Are you a single-member LLC looking to make an S-corporation election or an S-corporation looking to convert to a C-corporation?
- Or, are you a business start-up trying to decide on how to organize for tax purposes in the first year of your business?
Business Meals and Entertainment
The new Trump Tax Bill has changed the way businesses will view the deductibility of meals and entertainment expenses incurred during 2018 and moving forward. While business meal expenses are generally still deductible, entertainment expenses are not and must be tracked separately for tax purposes.
- Can you still deduct business related meals and entertainment expenses during 2018?
- What determines a deductible business meal versus non-deductible entertainment expenses?
Business Asset Expensing
Being able to understand the various tax write-off methods for assets your business purchases during 2018 and beyond is a key element for successful tax planning. The benefits may vary widely.
- What types of tax asset expensing options are available for your business during 2018 and beyond?
- Can you really write-off 100% of the cost of purchasing new or used assets placed into service during 2018?
- Do these expedited expensing options apply to improvements made to non-residential buildings?
Like-Kind Exchanges
The rules for like-kind exchanges have changed under the new tax law starting in 2018 and now apply only to real estate. However, have you heard about “Opportunity Zone” reinvestment opportunities and how they may benefit your tax situation?
- Do like-kind exchanges and/or trade-ins still apply for both real estate and tangible property for tax purposes?
- Does a like-kind exchange provide the most benefit for your business?
If you have questions about the discussion above and would like additional guidance, please contact us.
Daniel L. Crowson, CPA
dcrowson@burkettcpas.com
Adam R. Jackson, CPA
ajackson@burkettcpas.com
Burkett Burkett & Burkett Certified Public Accountants, P.A.
3101 Sunset Blvd
West Columbia, SC 29169
(803) 794-3712