Did you survive the curveballs of 2017, telling yourself that as long as you make it through this year, you’ll be okay?
Now let’s do it all over again.
You may remember the 2017 edition of small business changes—in which we explored changes in taxes, 17 states increasing their minimum wage, and the shifting political landscape. Now that we’re in 2018 and we face a new economic and political climate, guess what? Even more changes loom, especially in the world of taxes. Here’s what you need to know for this year:
Tax Bracket Changes for 2018
The life of the small business owner is much like that of any person—every dollar counts. That’s why it’s critical to understand if you can anticipate any changes to your personal taxes.
Much of the political hubbub in 2017 focused on Republican efforts to cut taxes—and indeed they did, getting the law passed and signed before the deadline. That means 2018 will be a new year for taxes. This, in turn, means new brackets.
Here’s the basic run-down from Forbes:
If that doesn’t look familiar in the slightest, there’s good reason for that. The rates have changed and the brackets themselves have changed.
But that’s not all. When you think about taxes for this financial year, remember also that the changes in the standard deduction can cause a dramatic change in your taxable income. Says Forbes:
The standard deduction in 2018 as the law currently exists is $13,000 for a couple filing jointly. That number will jump to $24,000. For single filers it jumps from $6,500 to $12,000.
Take Advantage of New Deductions
Want an immediate boost to your bottom line? Then don’t be afraid to take the deductions now afforded to you by the new tax law. According to ABC News, that includes items as small as a one-cent increase in the deductibility of business car mileage to a massive increase in the deductibility of new equipment purchases.
It’s that business equipment deduction that should really catch your eye. The deduction limit has expanded to $1,000,000 under Section 179, which means that the business equipment you purchase and begin using between January 1st and December 31st of this year will be deductible under the new rules. If your small business runs a lot of equipment—including computers—then this expansion can have a dramatic impact on your bottom line.
Changes in Health Care
One of the most noteworthy changes enacted by Congress and signed into law? Removing the mandate for individuals to buy insurance. At first glance, this might not seem to matter to you, as a small business owner. But small businesses can only hire individuals. If more and more individuals opt not to buy health care, it could put a larger emphasis on health-related benefits as you look to hire the best talent possible.
As Gusto points out, offering health insurance is “easier than you think,” even for a small business. If you can’t compete with larger businesses when it comes to benefits, it’s likely because this one area is holding you back. Given just how many employees rank health insurance as the single top benefit of their job, it’s fair to say that this is one way to fast-track your appeal to new employees.
Deduction Eliminations for Small Businesses
Although some deductions are expanding for small businesses—some are simply going away. As Motley Fool points out, don’t count on any of the following to save you money in 2018:
- Tax preparation expenses. This used to be a deductible expense, which was great for small businesses—just another excuse to let someone else worry about the burden of all that paperwork. It’s still a good idea to consult a tax professional for your small business, but you’ll no longer get the deduction for it.
- Unreimbursed employee expenses. Okay, so maybe this wasn’t your biggest priority in years past, but it’s key to remember that deducting the expenses in this category is no longer possible for the 2018 tax year.
- Employer-subsidized parking. Deducting this from taxes was a great way to justify the investment—now, you might want to think about your bottom line as well as the bottom line of your employees.
Get Familiar with the Pass-Through Deduction
If you’re familiar with the world of small business, then you probably know what it means to be a “pass-through” company. The Tax Cuts and Jobs Act created a new tax deduction for people who own pass-through businesses.
See the rundown from CPA Practice Advisor for more information, but definitely seek out this information, because it can have a dramatic impact on the bottom line for your business. Certain “qualified business income” can actually be deducted in specific amounts, provided that—as the name suggests—it qualifies under IRS rules.
Sound complicated? It is. And it’s a reason you’ll want to seek out a tax professional in 2018 if you haven’t already.
Enhanced Marketing for Your Small Business
The year 2018 is a far cry from the first days of the Internet, and the tools at your disposal have gotten a lot more sophisticated. This is especially true in the world of marketing.
If you saw the this recent post at Grasshopper, you know that AI (artificial intelligence) can have far-reaching implications for your business. What about other trends? Forbes points to location-based marketing as an important trend upon which to capitalize—even to the point of creating custom messages to people who have enabled GPS tracking and approach your location. As the popularity of mobile marketing continues to expand, the potential of location-based marketing will only grow.
Making the Most of 2018
Every year brings curveballs—whether it comes through unexpected headlines or unexpected changes in your personal life. But a strong small business is not only adaptable. It can identify some of the key trends that will define the coming year. This will make you better not only as a leader sharing his or her vision with your small business, but more adaptable when true changes do come your way.
Do you have any thoughts on what will be the major changes in 2018? Leave your thoughts below.