Opportunities for Businesses Under the New Tax Law

 The new tax law offers you opportunities that could significantly improve your business’s profitability and growth. To ensure you make the right decisions, careful tax planning is essential. Here are some points to consider.
Business Structure
Under the new tax law, sole proprietorships and pass-through businesses (partnerships, LLCs taxed as partnerships, and S corporations) may benefit from a new tax deduction of 20 percent of qualified business income, which includes ordinary income and deductions. To decide whether this will help your business, you will need to consider the changes in allowable deductions and that this deduction concludes at the end of 2025.
C corporations will profit due to a tax-rate drop from a high of 31 percent down to a 21 percent flat rate. Should you make the change to a C corporation? The answer for some is yes, and for others no. The drawback of C corporations is double taxation. Profits are taxed to the corporation and owners pay tax on the same profits when receiving dividends that are not taxable to the corporation. Your tax professional can help you decide whether changing the structure of your business will benefit you.
Other Opportunities
If the new tax law will result in greater profits for your business, your improved bottom line could enable you to retain and hire more qualified employees, improve your facilities, increase advertising, or improve your Internet presence. You may consider pay raises or improving employee medical coverage. If you purchase new equipment, like computers, you will be able to write off the full cost immediately. There are also benefits to purchasing pre-owned trucks and cars, and for renovating your facility.
The bottom line is the new tax law provides many new opportunities for businesses. We encourage you to meet with your tax professional to take full advantage of them. We offer unlimited tax planning advice to our clients. Therefore, if you are client, we urge you to make the most of this opportunity.
Professional Tax & Financial Services is located at 25124 Springfield Ct., Ste. 260, in Valencia. For more information, please call 661-259-1967 or 1-800-998-4829. You may also visit our tax services website at www.scvprotax.com.