The content provided in this blog is designed to serve as a general guide to bookkeeping for the creative professional, and is not intended to be relied upon as legal, accounting, or tax advice. We recommend you consult a professional about your specific situation.
Taxes can be a pretty polarizing topic, but if there’s one thing everyone can agree on, it’s that the recent tax bill, signed into law in the waning days of 2017, is long. Like, 1,100 pages long.
It’s also confusing.
The original idea was that this was going to simplify everything so you could file your taxes with a postcard. That’s not happening. Even accountants are confused.
The precise impact of the 2017 tax bill will hinge on the unique circumstances of your personal and business finances but there are some general changes that every small business owner should be aware of.
As you have probably heard to an extensive nauseating degree, there were some changes to the tax law beginning in 2018. If you want more information, we have an e-book explaining this. But for here, we have a short recap of the changes you will want to know about:
SOME BUSINESS DEDUCTIONS ARE CHANGING
First, there is a 20% deduction for qualified business income. This one gets a bit tricky, so work with a trusted tax software or a tax professional on this one. It very well may save you some tax dollars, so check it out when you do your taxes.
The meals and entertainment deduction got a pretty big facelift under this act. So, you can no longer deduct any entertainment expenses. Meals remain deductible at 50% (for the most part). What does that mean? If you entertain prospective or existing customers for your business, be sure to separate the entertainment expenses from the meals. For example, if you treat your prospective customer to your VIP box seats at a concert, the price of the tickets would be non-deductible. However, food & beverages would be deductible at 50%, so pay for them separately and keep your receipts.
This act provided some tax benefits to buying a vehicle in the businesses name. So, if you’ve been itching for a new business vehicle, you may want to check into this further.
As a business owner, what do you need to know about taxes?
The good news is, all you really need to know are some key tax rules to get you the most bang for your buck, so to speak.
So put out of your mind the worry of doing something so wrong it will land you in jail, or with a massive tax bill that will bankrupt your business. That usually happens only when taxpayers let situations go unresolved over time.
If you have good records, and save for upcoming tax bills you should be in good shape.
If you want to understand the full spectrum of the tax code and how it applies to your creative business, contact Business Solutions by Design, today!