The Benefits of The Tax Cuts and Jobs Act for Your Business
The Tax Cuts and Jobs Act (AKA – Trump Tax Cuts) passed in 2017 brought real changes to how small businesses file their taxes for many years ahead. Whether you’re a contractor, a medical professional or own a retail or auto body shop, this Act may benefit your business in several ways and it’s important to understand what it offers you.
Here are just some of the benefits we think you can take advantage of:
Enjoy a 20% Business Income Deduction
Eligible small businesses who structure themselves as pass-through entities (non-C corporations), can benefit from a 20% deduction on their total taxable income amount. For instance, if your business’ taxable income was $100,000 then after the 20% deduction, you will only have to pay taxes on $80,000.
Qualify for 100% Bonus Depreciation
Small businesses can now deduct 100% of the depreciation of qualified personal property used for business purposes for the first year. Qualified properties may include cars, computers, software, machinery, equipment, office furniture and more.
Allowance to Use Cash Accounting Versus Accrual Accounting
The new law allows for small business owners to use cash accounting methods rather than accrual accounting. For businesses with inventory, this means you can recognize sales and expenses earlier and not have to wait to record expenses when you receive a bill.
Get Tax Credit for Family Leave
If you provide family leave benefits to your employees, you can benefit from a tax credit for your 2018 and 2019 tax filings. To qualify for this credit your business must have a written family paid leave policy with two weeks paid time off.
There’s a lot to the new tax laws and understanding the nuances may require a professional. Make sure you’re prepared to talk to your accountant or a tax professional by having your paperwork organized and ready.
Meanwhile, to learn more about The Tax Cuts and Jobs Act read the original article at The Balance Small Business