Tax Law Changes Demand Attention
Friday, February 16, 2018
by Kelly Weaver, Small Business Development Center Regional Director
For most small business owners, changes in the tax law take a back seat to the day to day operations. Here’s a couple reason why you should pay attention to the recent tax law changes.
Payroll Issues – The tax tables used to calculate withholding for paychecks have changed significantly. First, make sure you (or your payroll service) is using the most recent tax tables (IRS Publication 15). If you are using a payroll software, be sure to update it before every payroll so you are using current tables. The new 2018 tables are out now but don’t be surprised if they get revised during the year since the roll out was a quick one. Also, get updated W-4 forms from your employees. On a side note, South Dakota has added a new administrative fee to some state unemployment insurance accounts. Refer to the notification you received from the SD Department of Labor last October for details or call them at 626-2312.
Income Taxes – There are many changes that will affect your business taxes including a new 20% deduction of ‘qualified business income” (Sec. 199A) and the reasonable compensation test, as well as business deductions on interest, entertainment, deprecation and business losses. None of these are without exclusions or restrictions but no doubt many businesses will be affected by at least one of these changes. So, what to do? Once the tax season rush is passed, contact your tax professional for some guidance to see how these new laws can affect your business and plan for what changes you should be putting in place to deal with them. Waiting till you file your 2018 taxes is TOO LATE.
Ideally, you should meet with your tax professional in the last quarter of the year with a good estimate of what your year-end revenues and expenses are expected to be. With their guidance, you will have a couple month to make any changes that could limit the impact to your businesses. Until then, do some reading and get a little educated. Understand that each business situation is unique and these complicated laws are subject to interpretation (with the IRS’s interpretation being most important) so you’ll want an educated tax professional in your corner.
Category: GROW SD