Whether your business is new or old, one thing is always consistent – taxes. It’s important to note that tweaks are made to tax laws every year; some big and some small. Whenever a substantial change does happen, it’s important to understand how that can affect your business and ultimately your bottom line. Here are some of the big tax changes in 2018 to be aware of.
Per the “Tax Cuts and Job Act” that was passed in congress recently, businesses have a couple of big things to watch out for. The first is the change to corporate taxes. If you are planning on filing your business as a corporation, you should know that you will now just have a single tax rate to apply to your company revenues. That rate is 21% of your taxable income. In addition to that, starting this year there is no Alternative Minimum Corporate Tax.
According to section 199A, if your business is considered a pass-through entity such as an LLC, S-Corp, sole proprietorship, or partnership, you can now get a 20% deduction on your Qualified Business Income. Qualified Business Income is defined as your total revenues minus all of your expenses on the year. There are some stipulations for getting this deduction, but it will likely affect about 70% of US businesses.
While this is not a comprehensive list of all the tax changes in 2018, these are some of the biggest. When starting a business, it’s important to be aware of how yearly tax changes might affect the way your company operates. Here at GovDocFiling, we can help you with important steps relating to taxes such as filing for a DBA, completing an online EIN application or submitting an LLC file for tax return. Contact us today by filling out this form!