ADVICE FOR SMALL BUSINESSES THAT WANT TO LEGALLY PAY LESS TAXES

Don’t Worry– 

I’ve read all the laws and regulations to save you from suffering

Tax season is everyone’s “favorite” time of the year. 

If you’ve had a bad year, Old Uncle Sam might go and just make it even worse by demanding for his piece of the pie. And… Even if you’ve had a good year… well… you still get to pay Uncle Sam too. Unless you want to go to jail for tax evasion. (We don’t recommend)

With deadlines right around the corner, and an expiring TCJA (Tax Cuts and Jobs Act) put in place in 2017, there are lots of changes to the tax codes that you need to be aware of to effectively manage your business. 

Here are the biggest changes so that you won’t end up paying more than your fair share.

As the previous tax code is set to expire, businesses can expect changes to the current tax codes that affect their business.

That is, unless….Congress and the Federal Government can find a way to come together and implement new plans in time so that we aren’t affected. 

But we all know how that goes, hoping that the government comes to save you is like hoping the bully starts giving you his lunch money. Not. Gonna. Happen.

So here is how we can plan for current conditions and what we know so far about the changes.

The biggest change for individuals is the expiring of the TCJA, which saw tax rate cuts for many individuals filing from 2017 through 2025. However this current plan is set to expire, and rate also set to increase for most tax payers. Aka, you pay more money.

Another big change which is set to expire in the coming years is the Transfer Tax. The $13.6 Million exclusion for estates, gifts, and inheritance transfer tax is expected to be chopped in half in 2026. Aka, you pay more money. (Starting to see the pattern?)

Taxpayers with large estates should plan to leverage the better rates before it is too late. 

Here’s A List Of Benefits For Small Businesses And Start Ups

One of the changes that will save small businesses the most money is the return of 100% Bonus Depreciation. With this, companies can write of the full cost of property and equipment that is eligible in the year of purchase. 

A further benefit is the Expansion of Qualified Business(QBI) Deduction. This deduction will allow for small businesses to reduce their tax liability on income by 20%. This can translate to less tax on business profits.

If you own a sole proprietary, part of an LLC, or running an S Corporation, than you will likely qualify for this tax deduction, just ensure that your business is properly structured for eligibility so that you don’t miss out on this large tax break 

An additional big break that entrepreneurs looking to start a Small Business can benefit from is that the Start-Up cost deduction limit has increased from $5,000 to $50,000! 

This new adjustment can apply to initial business costs such as marketing, legal fees, accounting, and equipment. This can make launching your business much easier with lower upfront costs and tax liabilities. 

How Small Business Owners can Take Advantage and Take Action

With lots of new small business tax deductions coming in 2025, it makes it the perfect year to be strategic and take the benefits that are being offered. 

Here are some tips to leverage the new tax policy:

Reassess your business's budget to make larger purchases. 2025 is a great year to invest in your business with 100% bonus depreciation and steady tax rates. New equipment costs, property, and technology could all potentially be written off as depreciations and timing these larger purchases could bring lots of savings in taxes.

Optimize the structure of your business to ensure that you are taking advantage of the QBI deduction and other benefits that could support your business with the proper deductions and credits. 

So if you want to save money in the upcoming tax season, keep an eye on these new changes.

Also if you need help structuring your business so that you can save, contact us today for a free business review.

Talk soon,

Noah Robertson