The new GOP tax plan, also known as the Tax Cuts and Jobs Act, is final as of December 2017. This sweeping reform of the U.S. Tax Code will affect your business, in more ways than you may realize. This major tax act is one of the most significant reforms for businesses and corporations, with the elimination of the Alternative Minimum Tax (AMT) among other changes.
While this new legislation may result in a reduction of taxes for families and individuals, the changes may affect businesses in different ways. Here are a few of the ways that your business may be impacted:
If you’re a US corporation, you will benefit from a large tax cut
If your business is registered as a U.S. corporation, you’re in luck! The new tax reform actually grants a generous tax cut to corporations registered in the US. Instead of a maximum corporate tax rate of 35%, C corporations that are personal service corporations, such as legal and accounting firms for instance, will now have a 25% rate.
Note that personal service corporations are corporations performing services in the fields of health, engineering, accounting, architecture, actuarial science, consulting, performing arts, and law. This lower tax rate is particularly attractive for corporations because it will ultimately make them more profitable. It also is a great incentive for foreign businesses to move to the U.S.
The corporate AMT no longer exists!
Prior to this tax reform, the corporate Alternative Minimum Tax (AMT) consisted of a 20% tax rate that applied in case a company’s tax credits resulted in the business’ effective tax rate dipping below that level. Under this new reform, the Alternative Minimum Tax (AMT) no longer exists.
Your corporation’s ability to deduct its interest expense is now limited
This new tax bill actually limits any corporation’s ability to deduct their interest expense up to 30% of their income. This also means that your firm may face more challenges when it comes to borrowing funds. It may also result in businesses issuing less bonds and buying back their stock.
There are new limits on deducting Net Operating Losses (NOL)
If your business’ expenses exceed its income, your business may incur a Net Operating Loss (NOL). Under the previous tax law, this Net Operating Loss would be carried back two years. This would result in a refund of the taxes paid in the past two years, in partiality or in their entirety.
The new tax regulation eliminates carrybacks of any Net Operating Loss. The only exception applies to small businesses in case of disaster and casualty losses. In addition, taxpayers would be able to deduct any Net Operating Loss (NOL) only up to 90% of the business’ taxable income.
Increase in Section 179 Personal Property Expensing
Prior to this new tax regulation, business owners may have been able to deduct up to $510,000 of personal property cost purchased and used for business in a single year. Now, this amount is increased to $5 million for property acquired and placed in service between 2018 and 2022.
If your business has depreciable assets, you can now deduct their cost in one year!
Instead of amortizing any depreciable assets your business may have over the course of several years, you can now take one deduction in one year! However, the depreciable equipment must be purchased after September 27, 2017 and before January 1, 2023.
In addition, this 100% bonus depreciation applies to both new and used property, whereas previously it was only available to new property only. The bonus depreciation for automobiles would reflect an increase from $8,000 to $16,000. However, you should note that depreciation may not be used for real property.
If you’re a pass-through service business making less than $315,000 per year, you may get a 20% deduction!
Pass-through businesses, including sole proprietorships, partnerships, and S corporations, now get a 20% deduction. This is a great benefit to small businesses, since such a deduction would lower your business’ taxable income. In turn, it will allow these businesses to reinvest any money saved back into the company’s operations.
However, this deduction only applies to service businesses making less than $315,000 per year. This is to avoid potential tax loophole, by limiting certain service-based businesses from taking advantage of lower taxable income.
No more taxes on your overseas profits
Prior to this new legislation, corporations engaged in business abroad were taxed on the profits they incurred in foreign territories. However, the new regulation includes a shift in what is known as the “territorial” tax structure. As a corporation, you may now have to retrieve profits previously held in foreign territories with a one-time tax of up to 15.5%.
Offering health insurance to your employees may cost you more!
This new tax regulation also results in the elimination of one of the major tenets of the Affordable Care Act. This requirement consisted in mandating all individuals to purchase health insurance. This also means that insurance premiums will more likely be raised by insurance companies. In return, your health insurance costs as related to your employees could skyrocket as well!
You may be able to choose between the accrual and cash method of accounting
Under this new tax reform, more businesses are now allowed to use the cash method of accounting instead of the accrual method of accounting. The cash accounting mandates that a business record income when it is received, and expenses when they’re paid. However, under the accrual method of accounting, both expenses and income are booked when owed, as opposed to when they’re received or paid.
As of now, businesses with average revenues of $25 million or less are exempted from using the accrual method of accounting, which is a $5 million increase from the prior tax law.
Your employees’ withholdings will change!
Considering the standard tax deduction has actually doubled and personal exemptions have been eliminated, what you withhold from your employees’ paychecks will need to be modified. Additionally, any bonus, commission or supplemental wages are now subject to automatic withholdings of up to 28%. This is a 3% increase from the original 25% rate. However, these changes will not be in effect until 2018.
Watch those employee perks!
Prior to this tax regulation, businesses were able to deduct the cost of food and beverage provided to employees. However, only 50% of these costs are now allowed to be deducted. Additionally, please also note that this provision is only effective until 2025. After this date, you may no longer be able to deduct any of these expenses.
Other deductions and credits for your business will no longer exist
The new tax law also eliminates the following deductions and credits:
Deduction for domestic production activities
Local lobbying expenses deduction
Childcare tax credit provided by employers
Historic structures Rehabilitation Tax Credit
Work Opportunity Tax Credit
Credit for access to disabled individuals
While these changes will only take effect at the start of 2018, it will most likely take a few months for corporations and businesses to implement the related changes. Considering that many businesses have already set their budgets and outlined their growth plans for the new year, this may also result in significant delays.
Ask a CPA_ 3 Can’t Miss Tax Savings for New Parents
Congratulations on becoming a new parent! Not only is this a major life-changing event, it also has some seriously positive tax implications. There are several tax benefits available to new parents, as well as considerations to take into account as you plan your new child’s future.
First off, keep in mind that in order to claim your child as a dependent, s/he would need a Social Security card first. Make sure to take care of this as soon as your child is born, in order to claim them as a dependent as soon as possible. Remember that even if your child is born on December 31, you can still claim him/her for the entire year. Additionally, you may want to submit a new W-4 at work in order to adjust your tax withholding status.
Here are some tax savings to keep in mind as your family starts growing:
Check if your employer offers a dependent care Flexible Spending Arrangement (FSA).
Take advantage of any dependent care Flexible Spending Arrangement offered by your employer as a tax benefit. FSAs allow you to contribute on a pre-tax basis $5,000 towards childcare. This is $2,000 over the normal contribution limit of $3,000, and you should definitely take advantage of it.
Invest in a 529 Plan.
Even if you can’t fund it right away, consider opening a 529 plan for your new addition. Even minimal monthly contributions can add up over time. Additionally, consulting a financial planner on a yearly basis to discuss your current financial standing as well as your college savings goals can prove rewarding as you plan your child’s future. Also keep in mind that grandparents are allowed to fund a 529 plan, so encourage them to help as well.
Use a tax pro!
Don’t let the variety of tax deductions and credits available to you as a new parent overwhelm you. Instead, consider hiring the services of a tax professional to avoid mistakes as you do your taxes yourself.
Becoming a new parent is one of the most exciting milestones you’ll ever reach. Congratulations on this new part of your journey, and don’t hesitate to consult a tax professional to answer any questions you may have!
You get on your phone to quickly check what’s going on on Facebook before you move on to more important things; then what was supposed to be just a 10-15 minute activity turns out to be 30 minutes, then an hour, then 2 hours…We’ve probably all been there and done that…and I am preaching to myself here!
Social media is a MUST today for any entrepreneur, wannabe entrepreneur, professional just looking for resources, or for anyone who wants to meet new people, keep in touch with friends and reconnect with long lost ones!
However, as much as it is important, it can also turn out (and often does) to be detrimental to us, as it reduces our focus on important things and affects our productivity. When is the last time you read a post and decided to go trough all the comments to read people’s opinions on the matter being discussed? How often have you found yourself spending more time scrolling through your Facebook wall on your phone at work than you’re supposed to (And you’re probably not even allowed to use social media at work 😊)? The same goes on for other social media platforms (i.e., Instagram, Twitter…even LinkedIn); when is the last time you decided to read a book before bedtime and ended up spending more time on your phone than on the book?
It is obvious that as much as we need social media, it can end up using up so much of your time, and preventing us from reaching our goals. Thankfully, there are ways to avoid being trapped by all the social media madness and still make a good use out of it.
Here are 5 ways to take advantage of social media without letting social media take advantage of you:
Determine how much time you spend on social media each day
Spend a day tracking how much you use social media for non-work related activities; use a notebook to write down every single time you log in to a social media platform and when you log off. Do that from the time you wake up in the morning to the time you go to bed at night. I am pretty sure you’ll be surprised by the result you get; but that’s okay. Before you can solve a problem, you must admit there is one!
Determine how much time you need to spend on social media each day
Based on your result from 1), see by how much you can realistically reduce the amount of time you spend on social media. Of course, this will depend on the type of work you do; but for someone who does not use social media for any work-related activities, this time should be limited. It should feel like a challenge but an achievable goal at the same time! Listen, you don’t have to comment on that post right away, participate in all the ongoing discussions, go through all your friends’ walls to see what’s going on in their lives; the same things will still be there if you take a break and come back later! Or if you come back tomorrow!
Set an alarm
This may sound a little crazy, but if you are really determined and disciplined, it works. If you decided that you’d only spend a total of 2 hours on social media a day, stick to it! You’ll be proud of yourself. Some people may choose to do the whole 2 hours at night when they get home from work, others may choose to spread their time throughout the day; but whatever you do, set the alarm to remind yourself when your time is up. And when the alarm goes off, just stop!
Use your time on social media efficiently
This will help you stick to your allotted time for the day, but it is also good for your sanity because you don’t need to read/watch everything that is on social media! When you log in, spend a little bit of time on your profile to see if there is anything important you should be aware of, then focus on those pages/groups you follow on a regular basis. Finally, use the rest of your time as you wish.
Limit your accessibility to social media platforms
You may need to delete all social media apps from your smartphone and only access the platforms from your computer. This will most likely limit your usage as it will require more work on your part (Yes, logging in and off each time you want to get on Facebook/Instagram is really hard these days 😊!).
Hopefully, these small tips help! Please feel free to share any other tips you have!
With Love,
Huguette
Huguette Essoh Latte
Bio: Huguette is a God-fearing woman, a wife, a mom, a daughter, a sister and a friend. She is a Certified Internal Auditor (CIA) by trade and an entrepreneur in the making. When she is not working, she enjoys reading, spending time with her family and walking by one of the beautiful lakes of Minnesota where she resides, when the weather permits.
If you’ve been dreaming of starting your own business, or have already started, whether through a side hustle or full-fledged business, there are ways to do it at a low cost or even for free. One of the biggest obstacles for many to start a business consists in the initial investment that is sometimes required.
When I first started out hustling on the side through my blog, I didn’t have much money to devote to it. At the time, I had little babies, a full-time job and bills piling up every month. I wasn’t yet making any money through blogging, so the thought of investing money into it would often frustrate me. However, I was fortunate to have access to mentors and resources who pointed me to free tools you can use to start and grow your business virtually for free.
Here are 7 areas in which you can start and increase your business impact for literally no (or very little) money:
To make a business plan
There are many sources of free business plans out there. Here are a few:
There are a number of free website builders available online. However, many of these options may include the company’s branding on the site, which may take away from your own branding. Consider investing in your own domain name and some form of inexpensive hosting.
Managing your day-to-day activities also means to be as productive as possible. Here are a few tools to help you as you manage your business on a daily basis:
The holidays rhyme with parties and social gatherings, which also require the wardrobe to go with. For many of us, this means having to think of what to wear to this party, that event and that other social gathering. Which may or may not end up in yet another trip to the mall, spending non-budgeted money on non-planned expenses for fashion we may only use once, or twice, at best.
I know the feeling…As a career woman, and one who has a slight addiction to fashion (don’t judge me), I’ve found myself in this predicament one too many times. Here I was, roaming the get-together and oh, that New Year’s Eve bash too. Result: Christmas gifts budget expanded before said Christmas gifts bought. Which also translates in serious financial discussion with the hubby, and elaborate accounting schemes to cover the dire facts.
A few years ago though, on a fateful holiday season during which the family funds were being monitored more closely than usual (husbands do get smarter with time), I resigned myself to re-purposing my workwear into affordable, yet stylish holiday wear. Not only did I save some serious bucks (which I later re-purposed in after-holiday vintage shoe sales), but I also found some of the most elegant picks for holiday fashion.
Here are a few ways you can shop your own closet and re-purpose your workwear for the holidays:
That LBD that feels like a second skin and looks like a fitting, elegant yet appropriate glove on you? It’s the perfect alternative when you have nothing to wear for the holiday party. All you have to do is merchandise with some serious bling, upgrade your make-up to fabulous levels, and add a show-stopping pair of heels, and voila! You now have a classy and chic party dress for any holiday occasion.
For instance, I like this Maggy London lace detail crepe sheath from Nordstrom, perfect for the office to the party.
Don’t despise those work blazers aimlessly hanging in your closet! They’re the perfect companion to a fabulous party dress or skirt, and will add a classy touch to any party pants. Add a sparkly brooch and dazzling chandelier earrings for a perfect holiday look!
This rose-print jacquard blazer from White House Black Market is a powerful addition to any holiday outfit.
Add some sexy to your black suit
That black suit you’ve worn to your best interviews? Dust it off and take it out on the town for the holidays. Pair it with a sexy yet chic silk camisole, some show-stopping jewelry, and a sleek pair of pointy heels, and you’ll be in holiday business in no time!
I love this simple yet chic tropical wool suit from Ann Taylor, that can be re-purposed over and over from work to party.
Pull out that black pencil skirt
ASOS high-waisted pencil skirt – Photo credit: asos.com
Your classic black pencil skirt is begging to be recycled and paraded around town, so please oblige! Pair it with a silky blouse or delicate cashmere top for instant sophistication. Don’t forget to throw in some original tights, an original purse, and can we say fabulous!
I like this ASOS high-waisted thigh list pencil for its elegance mixed with a hint of sassiness.
Put your black slacks to work
Nothing to wear? Think again…Those black slacks that are so comfortable can be comfortable and holiday-ready too. How about adding in a delicate lace top, some striking pumps and make it the supporting act of a fantastic holiday style?
These Alfani tummy-control slim leg pants from Macy’s are a great fashion choice for the holidays!
Black pumps are the little secret of perfect holiday outfits. You can pair them with just about anything, from your favorite party dress to that holiday jumpsuit. No need to go shopping for expensive shoes you’ll only wear once (and will most likely murder your toes), when you can pull out those classic, chic work black pumps.
For instance, these Kristin Cavallari Gisele suede pumps from Zappos are both work and holiday-appropriate!
Re-use your understated work jewelry
If you plan on increasing the bling factor in your holiday wardrobe, consider recycling your work jewelry. Nothing like elegant pearls or understated studs to offset a sparkly dress or top.
How else can you repurpose your workwear for the holidays?
As soon as Thanksgiving starts looming near, the first thought on many people’s minds can be summarized in two words: Black Friday! Also known as the ultimate shopping day for many a deal-addict out there!
However, while there are many opportunities to save “beaucoup” money on Black Friday, there are even more opportunities to make it even more strategic by preparing adequately. I remember the days of waking up extra early on Black Friday to hit the stores, sacrificing precious sleep and turkey leftovers to score a few good deals. Fast-forward a few years later, I’m learning to indulge my beauty sleep and enjoy those mac-and-cheese-and-stuffing leftovers by doing some advance prep work!
Here are 7 steps to actually be ready for Black Friday, minus the stress, sleepless night before and missing out on the best leftovers because your cousins are too broke to go shopping but hungry enough to terminate any food in sight:
Make a list
Black Friday mistake numero uno: jump into the abysmal sales pit without a list! This simply opens you up to buying any and everything that has a discounted price tag in sight. Instead, smarten up and make a list the day before!
List all the gifts you need to buy for Christmas first, and any extras you’d like to indulge in! This way, you will focus on getting what you need first and save precious money, time and energy in the process!
Create a budget!
A woman (or man) without a set budget on Black Friday is setting herself/himself up for financial doom! Also read: you will come home broke (and hungry, but that’s another issue for another day!).
Again, do not jump into the Black Friday sea of sales without a budget, aka your holiday life jacket! Do some homework the week before and figure out how much each of the items on your list is going to cost you. Use sales circulars and ads to plan ahead of time how much money you will need. And do NOT, I repeat DO NOT, go over it!
Stay home!
Did I mention my sleepless nights from a few years ago, when I used to forego Holy Sleep for Tempting Sales. After a couple of kids and some pretty heavy Thanskgiving dinners over the year, I’ve become wiser (and more cognizant of my own physical limitations).
Did you know that according to dealnews.com, you can find the same, if not almost the same, deals in stores than in the comfort of your cozy home in front on your laptop, nibbling on some leftover fried turkey. Chile!
Before you sign up to venture out in the cold at the wee hours of morning, at the risk of getting stepped over for a deal on the new ipHoneX, consider doing the same at home! And saving just as much, plus beauty sleep, extra food and your life and sanity too…
Protect your credit
Keep in mind that your credit cards to shop online or offline can increase your chances for credit theft! As you score amazing deals and get all your African aunts the latest Fenty makeup products, remember to monitor your credit score too!
Use sites like Credit Sesame or Credit Karma to monitor changes in your credit score during this period.
Save some items for Cyber Monday
Cyber Monday is also a great shopping day! Think of it as the cute auntie to Black Friday who likes to chill comfortably at home! Instead of running from store to store with your barely digested Thanskgiving turkey still navigating your sleep-deprived body, you can just shop online on Monday (instead of doing your work)!
Reserve some items for Cyber Monday by placing them in your cart and saving them there! You’ll find them there on Cyber Monday, plus the discount you can now happily take advantage of!
Ship items directly to people
Take advantage of the many free shipping offers on Black Friday by shipping gifts and items directly to people! Instead of shipping them to your house, and then having to re-ship them out, you can kill two birds with one stone and score some serious shipping savings!
Plus that also means less to think about as Christmas approaches and you start losing whatever you have left of edges…
Google coupon codes for websites
Do some prep work and research the coupon codes for the websites you’re interested in! This will save you even more money, time and energy instead of scrambling at the last minute. Make a list of all the coupon codes you will need and save them in a safe, accessible place. Now that’s what you call organized shopping!
What other tips do you have to prepare for Black Friday?
A business plan is what a foundation is to a home. This means that without an appropriate business plan, chances are your business won’t make it. However, when we think of a business plan, many of us think of a daunting, lengthy process that may force us to figure everything about our business beforehand. Yet, it doesn’t’t have to be.
