We’re two years into tax reforms made under the Tax Cut and Jobs Act of 2017, but there’s more clarity now than ever on some of the new credits available to business owners.
With the start of the new year, accounting firms are hampering now more than ever that tax planning is a year-round endeavor. Filings for 2019 have only just begun, but it’s never too early for Baton Rouge business owners to begin planning for 2020 to take full advantage of the complex federal and state tax codes.
“Tax planning is really a year-round exercise,” Postlethwaite & Netterville Tax Services director Keith Crews says.
To get ahead for 2020, Crews offers the following tax tips to small businesses for the 2020 filing year:
• Revisit your corporate tax structure: Gone are the days of one size fits all LLCs and S corporations. With changes to the federal tax codes, small businesses are finding new bottom-line advantages in a wide range of business structures. Moving into the new tax year, businesses may want to re-evaluate their structure and analyze how a new model could bring new benefits. “For the first time in a long time, a structure change is beneficial in certain circumstances,” Crews says.
• Take advantage of retirement plan deductibles: The TCJA offers new deductibles for self-employed individuals on retirement plans. With all retirement plans, each choice comes with different deadlines to manage and contribution limits. Self-employed individuals with an SEP-IRA, for example, could contribute up to 20% of their earnings, or a maximum of $56,000, in 2019.
• Credits, credits, credits: New regulations are coming out for new and old tax credits included in the TCJA, giving more clarity on what qualifies businesses for each credit. Consult your accountant about any credits you think you may qualify for to bring down a tax bill. This includes credits for FMLA, research, new market credits and retirement plans. A growing number of small business owners have taken advantage of a 20% tax break for pass-through corporations on qualified business income.
Read the full list of tax tips for this year from the latest edition of Business Report.
