The New US Tax Reform: Breaking it Down for Your Small Business

The New US Tax Reform: Breaking it Down for Your Small Business

Recorded LIVE, tax experts Will and Kenji share how the new tax reform affects small businesses.

We answered top questions from viewers. You can find the time stamps below:

Q: Overall, how does the tax reform affect small businesses? [1:05]

A: You can expect to save money on your taxes, which means it’s a great time to invest in the business, whether that’s hiring more employees, buying more equipment, or expanding.

Q: 95% of small businesses are pass-through entities, and they experience big tax cuts. First, what is a pass-through entity? [3:33]

A: A pass-through entity is either sole-proprietorships or LLCs. It’s a business structure in which the income from the business passes through to an individual’s tax return.

Q: What tax cuts do pass-through entities get? [4:32]

A: You get a 20% deduction for the net profit of the business.

Q: Does that deduction apply to every pass-through entity? Are there limitations? [5:14]

A: There are limits: Not everyone can get the 20% deduction. Compensation is an example: If your taxable income is over 7,000, then that tax deduction will be phased out. Some industries also have limitations, like consulting services or law practice.

Q: Should small businesses switch to a C corp to capitalize on the massive tax cut for C corps? [8:00]

A: No, not necessarily. The pass-through entities also enjoy great tax benefits. Also, C corps are often called “double taxation entity” for a reason. Your entity is set up not only for tax purposes but for legal purposes. Also, if you change to a C corp, it’s a one-way street: it’s hard to change it back. So, definitely consult a tax advisor for your specific situation.

Q: Any changes to the meals and entertainment deductions? I heard they are going away. [10:23]

A: Yes! Meals and entertainment are being reduced from 100% deductible to 50% deductible.

Q: How about other important deductions, like commuter benefits? [12:43]

A: Commuter benefits are now not tax deductible at all for employers. Pro Tip! As a workaround, it might be worth trying to negotiate with your landlord if you can incorporate parking into your rent, which is tax deductible.

Q: Do these tax changes affect our 2017 tax returns, or does it just apply to 2018? [15:50]

A: Nope, it only pertains to 2018 moving forward.

Q: What is Section 179, and what are the changes to it? [17:45]

A: Section 179 allows you to expense equipment purchased for the business. With the new tax reform, it has been broadened and you can deduct even more — from 0,000 to ,000,000.

Q: How can I deduct unreimbursed business expenses without itemizing? [19:21]

A: It depends on the kind of pass-through entity you have. Will goes into more of that here.

Q: Any changes to business expenses that we should know about? [20:35]

Kenji: There are going to be some reductions to the interest expense. This will impact real estate the most. Listen to learn more on that!

Will: There are changes to the standard deductions and the personal exemption on your personal tax return. In fact, that entirely goes away with the new reform. There are some pros and cons with that change.

Q: What should people expect from their CPA? [23:55]

A: They should be proactive and reaching out to you to provide more guidance amidst the changes. Also, share your long-term plans with your CPA because you can be growing your business during this reform.

Q: Are S corps still the best for small businesses?

A: It’s a tax-saving status, so for many businesses, this is still a beneficial path to take.

Q: What are the main takeaways from the reform? [28:17]

A:
– Are there creative, legal, compliant ways to capitalize on the reform changes?
– How can you grow your business?
– Work with your CPA to create a growth path for your business.

———————————
About our guests:

Will Lopez is Founder of AdvisorFi.com, an online accounting and consulting firm for the next generation of business owners.

— Check out Will’s YouTube channel! https://goo.gl/Ms26GV

Kenji Kuramoto is the Founder and CEO of Acuity, which builds and maintains financial functions for entrepreneurs and small business.

— Check out Acuity at: https://acuity.co/

This Live Session is brought to you by Gusto. Gusto serves over 40,000 small businesses across the US with a refreshingly easy payroll, benefits, and HR solution.

— To learn about Gusto, visit: https://www.gusto.com.

— For more small business answers, visit us at:
https://www.gusto.com/ask-gusto

— If it suits your fancy, follow us on Twitter @GustoHQ

— AND join Talk Shop, our Facebook community for small businesses: https://www.facebook.com/groups/talkshopgroup/
Video Rating: / 5

A breakdown of how the GOP tax plan will impact everyday Americans and corporate America. #Tucker

Click Here to Leave a Comment Below 21 comments
starv88

I am starting a company with only 5 employees. An agency for on call work. Would this program be for me. In one year it should ho up to 10 employees.

Reply
Gusto

Got questions about the tax reform, or anything else small business? Ask us!

Reply
Charles H. O'Brien

THIS ALL BULLSHIT!!! GOVERNMENT SPENDING IS DESTROYING AMERICA!!!

Reply
VGSoundFX

3:35 eliminating the death tax helps ranchers and small biz? Isn't the death tax just taxing wealthy inheritance heirs when they get grandpa's will

Reply
Laju Lee

No. Tax breaks will not settle anyone; not the poor, middle class, or the wealthy. Stressing reinforcement of the Illustrations canvassed on our U.S. dollar (at its most “FACE VALUE”), is the only way to turn this economy around. Look, An economics professor once told me that a bar of soap can advertise the elimination of 99.99 percent of all germs- but that the .01 percent can kill you. That made me think of money the same way; that we can have knowledge behind 99.99 percent of money’s use, but that the .01 percent that we don’t understand about money can kill our economy. More education of what is drawn into the U.S. dollar means less in what becomes unknown about the U.S. dollar. That way, the poor will aggravate our foundation less, the middle class will actually learn to grow from all types of economic circumstances, and the wealthy will prosper from their own discernment methods of money.

Reply
The voice of reason

If you liberals don’t like the Trump tax rate, when it’s time to file your taxes just check the box labeled “not my president”, to pay the old Obama rates LOL

Reply
Luke Dance

Abolish carried interest

Reply
David Hume

"Kristi" spelling for christie, so her parents were on the cutting edge of the low class trend of spelling common names with bullshit letter salad. Republitards

Reply
Socratic Dialogue

Young professional families with children in California, New York and New Jersey will see their taxes go up, assuming they are itemizers.  So, unlike what Trump said, not all working families will get a tax cut.  He lied.

Reply
Socratic Dialogue

Why not just give each US household $15,000?  1.5 TRILLION dollars of debt divided by 100 million households, equals 15,000 each.  If we are going to run up the debt, why not just make it fair?

Reply
Socratic Dialogue

I'm a libertarians and this looks like war reparations against the blue states who actually pay the majority of the federal taxes.

Reply
Socratic Dialogue

What about state's rights!  TELL THE TRUTH.  Why should federal taxation trump my local property tax and my local income tax?

Reply
Nicholas Nichols

This country"USA" Is a beacon of how not to live.Our government takes money from us just because we go to work every day.Truth is we are all slaves of our government there power is the American People we are the ones who fuel this society.This country needs more consumers within the United states but how is that possible when you can get online and order something from China for half the price and it's the same product we as American's love a good deal.Our once Great Nation will never thrive again without WAR.This country was built by the blood and it will end by blood.

Reply
J LL

Politicians make six figures, we should change that.

Reply
Cassandra

She said nothing about that loophole. Never trust a person who cannot give you a straight answer.

Reply
Crab Out The Bucket

I wonder how many people going to jump on the Trump bandwagon now…

Reply
I YAM WHITE

here's how explain it to my Economy class;
When you eat more cookies ,your heart attack rate sky rockets over time..

If you keep your cell phone on the charger while watching YouTube,the battery life goes down.

If you borrow your friends PS VITA game,and it drops in the toilet,you'll have to pay him back.

In 2025,people making minimum wage will be struck with tax hikes that will cause civil unrest.

Reply
5VOLT S

Connect the DOTS…………. next thing is RUSSIA & COMMIES…

Reply
5VOLT S

Donald DUCK! Who you know went Bankrupt… and couldn't get a loan here in his U>S>A>
WWWWWWWWHYYY? He went to DEUTSCHE BANK….GERMANY…

Reply
5VOLT S

Mr. President O'Bama took office and inherited 2 wars….and before his term …Our crisis had happened…challenge me on this..GEORGY BUSH went to war and Fucked up!!

Reply
5VOLT S

DOES ANYONE KNOW WHY ???? TRUMP CANNOT GET A GAMING LICENSE IN LAS VEGAS OR ANYWHERE IN THE U.S.? GO FIGURE OUT FOX NEWS WATCHERS… you need Education, Music, Arts, Real Life and Coding…NOT GUNS!!!

Reply

Leave a Reply: