Knowledgeable Accountants Assist with S-Corp and LLC Tax Planning in Harrisburg

Expert advice on accounting practices and return preparation for small business owners

If you are a small business owner with an S-Corporation or an LLC, preparing your personal income taxes can be inordinately stressful. But, even if you’ve finally mastered the Schedule C, you might be wondering how the changes under the new lax law, formally called the Tax Cuts and Jobs Act, affect your situation. Should you stand pat, continuing to “pass through” your business earnings onto your 1040, or should you convert your company to a C-Corp to take advantage of the lower corporate tax rates? At Breon & Associates, we want you to get the full benefit of the law. We take a look at the totality of your circumstances, including your past reporting, examine your options, and provide a clear assessment. Our professionals have vast experience with personal and corporate tax preparation. We are determined to limit your exposure, so you can keep more of what you’ve worked so hard to earn.

How does the new federal tax law impact your small business taxes?

It’s been widely reported that the Tax Cuts and Jobs Act favors businesses over individuals, with corporate rates dropping precipitously to 21 percent and the top personal rate declining much more modestly to 37 percent. If that was all there is to it, incorporating would be a no-brainer. But, S-Corp owners are also eligible under Section 199a for a 20 percent deduction for qualified business income (QBI), which certainly narrows the gap, and there are many factors that determine what tax bracket you find yourself in. Plus, there are many other issues you’ve got to consider that could impact the amount you pay for your small business:

• The new law gets rid of the 15 percent corporate rate on the first $50,000 of taxable income. So, an incorporated small business is going to pay the full 21 percent on that first $50K.
• If you have an S-Corp or LLCs, you can deduct 20 percent as a Qualified Business Income Deduction. But, this new 20 percent deduction under Section 199a is very complex and may be limited under certain conditions.
• The new law sets a limit on deductions for business interest incurred by certain large businesses.
• If you’ve been taking the nine percent deduction for domestic production, that is no longer available.
• If you bought a business asset and put it into service during the year, you can write off 100 percent of the expense. Under the new law, the maximum deduction increased from $500,000 to $1 million. The law also increased the phase-out threshold from $2 million to $2.5 million.
• If you’ve invested in residential property, the alternative depreciation system recovery period for has been changed from 40 years to 30 years.
• You can get a greater tax break for a business vehicle you buy and put into service.
• You can no longer deduct the cost of transportation-related fringe benefits for your employees, such as parking fees and mass transit passes.
• You’ll have a harder time deducting business entertainment costs.
• There are new caps on business losses: a couple filing a joint return is limited to $500,000, while single filers can claim up to $250,000.
• Sexual harassment claims that are subject to a non-disclosure agreement are no longer deductible expenses.
• More businesses will be able to use the cash accounting method, since the ceiling has now been set at $25 million.
• Deductions for net operating losses are reduced.
• You can get a partial tax credit for amounts spent on paid family and medical leave during the year.

Despite reform, U.S. tax laws remain too complex for average Americans to deal with, and any gaps in your understanding invariably cost you money. That’s why, year after year, with client after client, our accounting services pay for themselves. Not only can we prepare your taxes or this year, we can also provide guidance on best practices that will save you money in the future.