As we approach the end of tax season, if you haven’t yet completed your taxes, now is the time!
One of the benefits of hiring a seasoned tax preparer is in gaining valuable insight as you look ahead to the next year. A good tax preparer is not only proficient in preparing your taxes, he / she is also an expert in tax law. When you combine this knowledge with a deep understanding of your unique financial picture, there is perhaps no one more qualified to provide excellent tax planning advice.
Tax planning can be complex and time consuming, so be aware addressing these questions may result in separate consulting arrangements depending on how your tax professional handles it. That said, here are a few questions you can talk to your preparer about which will translate into direct dollars for you and your business for 2018.
1) How will the changes to the tax system affect my business?
2017 saw a massive overhaul to our tax system. This was signed into law in December of 2017, with most of the provisions taking effect for the 2018 tax year. This means your tax return could look MUCH different next year than it does this year. So how do you prepare for that? It starts with being proactive.
Corporate tax rates have been reduced, does it make sense for your pass-through entity to incorporate?
What about fringe benefits? What types of adjustments must be made to take advantage of changes to the benefits you are offering your employees?
2) How will the changes to the tax system affect me personally?
Tax rates have changed, what is your new rate? Should you adjust your withholdings? The standard deduction has changed, will you still be itemizing next year? Many people who once itemized may find themselves taking the standard deduction moving forward. With this in mind, perhaps some of the expenses you normally incur thinking you’ll be able to use it as a tax deduction will not come into play this year. This is information you’ll want to know before writing the check.
Planning a move this year? Moving expenses are no longer deductible except for military members.
Estate planning might also change for you now that the estate tax has changed.
The point is, a LOT has changed. Conventional wisdom and common planning strategies have been turned upside down and replaced with new strategies. You should know what those strategies are so you can take advantage of them and save yourself money.
3) What would be a tax efficient benefit I can provide for my staff in 2018?
Remember we are looking for questions that will translate into direct dollars for your business, and nothing translates into direct dollars like decreasing employee turnover. Studies show that replacing highly-trained employees can cost over 200% of their annual salary! Turnover is expensive.
The success or failure of your business ultimately falls on the team of people you’ve hired. By rewarding them with a new employee benefit, one that is tax efficient for you as a business owner, you can receive the benefits of increased staff morale without breaking the bank.
As you look ahead to next tax season, we highly encourage you to be proactive in your tax planning. It should have started January 1, but it is never too late to get started!