You don’t put off that mid-year trip to the doctor for a check-up because your health is important. Well your financial health is just as important! Time for you and your business to have a mid-year check-up.
Not sure how to review your goals and update your financial plan? Here’s how to get started, Part 1.
BEST BETS FOR BUSINESSES:
1. Review your choice of entity type in light of Tax Reform’s new deduction of up to 20% for pass through entities on “qualified business income.” See this prior article: Small Business Owners Need to Pause and Consider the Impact of Tax Reform on the Pass Through!
2. Tax Reform reduced the corporate income tax rate to 21% – but some C-Corps should be prepared to pay a bit more. The new law didn’t keep the 15% corporate rate on the first $50,000 of taxable income.
3. Look at your budget and make sure you are on track. Especially be sure to review marketing expenses related to corporate meals and entertaining clients – employer’s tax deductions have changed. See this prior article: Are Entertainment Expenses Extinct?
4. Look at your cash flow, debt load and lines of credit – short term interest rates are headed upwards.
5. Adjust your withholding and estimated tax payments if necessary.
6. Assess the health coverage you offer. Comparing different plans may uncover better premium rates for your business when it’s time for open enrollment.
7. 100% bonus depreciation is back. Have a look at what equipment you have purchased and any improvements you have made to your facilities (or need to make!) – don’t overlook depreciation deductions for capital investments. There’s also a higher cap on expensing business assets.
8. Review potential employer retirement plan contributions required.
9. Need a vehicle for your business? Now is the best time to buy because new or used business vehicles get plenty of breaks under the new law. If purchasing a heavy SUV for your business, you can write off up to 100% of the cost. And if you buy a heavy pickup truck for business use, you can expense up to the full cost.
10. Examine your NOLs. Moving forward, net operating losses can only offset 80% of future taxable income. No more “carry-backs” – but you can carry forward indefinitely.
11. C-Corps with gross receipts of less than $25 Million may want to revert back to the cash method rather than the accrual method of accounting.
12. In addition to expenses, it’s time to reevaluate your sales and production goals, your inventory levels, your human capital and investments. Are you where you should be at the half way mark? Can you make up lost ground? Do incentives need to be put in place?
13. Make sure you have considered a Business Exit Plan for the future to create value as well as cash flow in your business, strengthen your management team, and make your business attractive to potential buyers.
Contact Us: Tax reform has been in effect for over 6 months now – there are 6 months left in the year to make changes that could save you tax dollars on April 15, 2019! Let’s get started. Be a part of Fuoco Group’s New Financial Dialogue. Call toll free 855-534-2727, or contact us directly at cpa@fuoco.com.
