A stronger economy has small business owners optimistic but questions about changing business tax laws can be overwhelming. It seems that every year comes with a new set of tax challenges from Uncle Sam. Keeping them all straight, organized, and filed on time leaves many small business owners uncertain. Here are 5 tax laws all small business owners should know about.
This is something everyone needs to be familiar with. Small business owner are trying to keep costs low and profits high. Tax breaks are a great way to capitalize on your own investments. There are several unique tax breaks available to different types of business, so it’s an important section to check out. For example, this year the deduction for financed or leased equipment and software doubled to $1 million. However, the breaks change each year, so you must check back from time to time to be sure you have the most current information.
This is a big one not to miss. This year, in 2018, there are 18 states with higher minimum wage requirements. Some states have independent minimum wage floors, and others tie their minimum wage to inflation, so it’s important to know what the regulations are in your area. Wage theft lawsuits can be detrimental to small businesses that aren’t fair to their employees.
Net Operating Loss:
If your company ended up in the red this year, it can actually help you in the future. When your costs exceed revenue, it creates a Net Operating Loss. The new tax laws allow you to carry that loss forward to offset future taxable income. They cant be carried backwards, but using them moving forward can help you keep more of your income in the future when your business is more profitable.
The Right Forms:
Using last year’s forms won’t cut it. You need to be sure you’re using the right form for the right year. This is especially important if it changed, like the I-9. This important form got a makeover in 2017 and it required for every employee.
Work Opportunity Tax Credit:
The Work Opportunity Tax Credit is a big deal because it gives business owners a tax break for hiring those who have been unemployed for a while. This was extended through 2019. The extension added a 40 percent credit for the first $6,000 paid to a new hire that had previously been unemployed for 27 weeks or longer.
When it comes to tax laws, the changes can be unpredictable and confusing and new economic and political climates can make a big difference on your small business tax filings. This is why many small businesses choose to outsource their tax filings to an outside firm that takes care of this area for them. This way, documentation and filings don’t get put on the back burner, and you can rest assured that you’re accounting is taken care of on a daily basis. If you are not confident in your own knowledge or capabilities for filing small business taxes, look into a professional team to do this important work for you. There is no replacement for a highly-trained professional to keep your business on the right track.