Year-end tax planning for small businesses

Managing a business is not easy. With multiple changes in 2018 to tax laws, it is helpful to know or refresh yourself on how some of these changes will impact you and your business. The following tax planning strategies can help you better prepare for the 2018 tax season.

Year-End Tax-Planning Moves for Businesses & Business Owners

  • Small businesses may be entitled to a deduction of up to 20% of their “qualified business income”. For 2018, if taxable income surpasses $315,000 for a married couple filing jointly, or $157,500 for all other taxpayers, the deduction may be limited based on certain criteria. This 20% deduction can generate significant tax savings for small business owners.
  • More small businesses are able to use the cash (as opposed to accrual) method of accounting in 2018 and later years than previously allowed.
  • Businesses will be able to write off most depreciable business assets in the year the business places them in service. The 100-percent depreciation deduction usually applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Qualifying items generally include machinery, equipment, computers, appliances and furniture.
  • Deductions for expenses related to entertainment, amusement or recreation are no longer allowed; however, taxpayers can continue to deduct 50 percent of the cost of business meals if the taxpayer or an employee of the taxpayer is present and other conditions are met. The meals may be provided to a current or potential business customer, client, consultant or similar business contact.
  • Expenses associated with transportation fringe benefits or expenses associated with providing transportation for commuting are now disallowed. The exception is if transportation expenses are necessary for employee safety.
  • Special rules now allow an employee to exclude certain achievement awards from their wages if the awards are tangible personal property. An employer can also deduct awards that are tangible personal property, subject to certain deduction limits. Tangible personal property doesn’t include cash, cash equivalents, gift cards, gift coupons, certain gift certificates, tickets to theater or sporting events, vacations, meals, lodging, stocks, bonds, securities and other similar items.

As mentioned, 2018 brought on some major changes to tax laws for businesses and business owners. While this information can help you prepare, it is best to consult with a tax advisor before making any moves. If you would like assistance in how to get the most out of your upcoming return, please contact Caroprese & Company. We look forward to assisting you this tax season!

 

ABOUT CAROPRESE & COMPANY

Caroprese & Company is a certified public accounting firm that provides innovative and strategic services to a diverse client base of individuals, families, small and medium size businesses, government entities, non-profits and multi-national corporations. Our dynamic professionals perform at a high intensity and are laser focused on providing excellence to our global clientele.

CONTACTING CAROPRESE & COMPANY

This publication is provided by Caroprese & Company as a service to its clients and colleagues.  The information and content included in this publication should not be construed as technical advice.  Questions regarding any matters discussed in this publication should be directed to Brandon Caroprese whose contact information is listed below:

Brandon Caroprese, CPA, MST

Tel. (201)-591-1783

Email. bcaroprese@caroprese.co

Share this article:

The Information contained in the Caroprese & Company (“Caroprese”) website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved. Given the changing nature of laws, rules and regulations, and the inherent hazards of electronic communication, there may be delays, omissions or inaccuracies in Information contained in the Caroprese website. Accordingly, the Information on the Caroprese website is provided with the understanding that the authors and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisors. Before making any decision or taking any action, you should consult a Caroprese professional.