2018 Business Tax Changes
A huge part of the Tax Cuts and Jobs Act effective in 2018, is the major reduction in the C Corporation tax rate.
it was slashed from 35 percent to 21 percent. If you’re a pass-through entity right now, you might be wondering if you’d be better off as a C Corp to take advantage of that 21% rate.
If you are looking to re-invest profits back into the business, then a C Corporation might be the optimal business structure – this has always been the conventional guidance but it’s even more true now with the tax rate at 21 percent.
If you are looking to take a bulk of the profits out of the business and put them in your own pocket, a pass-through entity is still most likely better.
The bottom line is this is a good time to think about the tax changes and your business structure. Keep an eye out for when the IRS releases additional guidance. This is key to understanding the 2018 tax changes for business.
A primary reason to form an LLC or Corporation has always been the ability to minimize the personal liability of business owners from things that happen in the business.
Despite the 2018 tax law changes, this remains true.
The most important reason to form a business entity isn’t necessarily to save a bit on taxes; instead it’s to protect your personal assets for years to come.
20% Deduction for Pass-Through Income
The law creates a brand new tax deduction for owners of pass-through entities like sole proprietors, members of LLCs, partners in partnerships and shareholders in S Corporations. For taxable years beginning after December 31, 2017 and before January 1, 2026, these individuals can generally deduct 20% of their qualified business income (QBI) from a pass-through entity. Sounds good, right? And it is — but there are a few details to know:
Strategic Business Tax Planning
Strategic Business Planning is much more than a tool to obtain financing. If you still have all your plans and ideas locked up inside your head, preparing a strategic plan can help you clarify your company's direction. It can ensure that your key leaders are all on the same page, and keeps both management and staff focused on the tasks at hand......Blah Blah Blah.
This page started as a generic offering by the Website Host Company & focused on "Strategic Business Planning." The only problem is not only do we not offer creating a Business Plan to help you obtain financing...we are not good at it. Why?
Because any Business Plan created in order to obtain financing is full of projections based on either your best hopes for the future or an increase in prior real profit or loss results.
We would rather focus on reality.
When a small business owner has a nice profit and the last few months of the year roll around...thoughts turn to how can I cut my taxes?
That is what Business Tax Planning is all about....how to cut your taxes.
How do you develop a year end Business Tax Plan that saves taxes?
The real answer is that normally it takes spending money to save taxes.
The question is do you really need the asset or retirement contribution that saving taxes requires...and can you afford the expenditure of the funds that saving taxes requires?
Here are some helpful links: