It’s that time of year again — the ever-exciting tax season. 2018 brought with it a number of changes to tax laws, including alterations that affect how small and mid-sized businesses, like most promotional products companies, should be filing. Idea Custom Solutions doesn’t want you to be left in the dark when you work on your business taxes, so we’ve compiled some tips and helpful things to get your business through tax time without incident.
One of the biggest changes — and the most publicized — is a new 20 percent qualified business income deduction. This applies to sole proprietors, S-corporations and other pass-through entities. But it comes with limitations: if you want to take the tax break for your business, you must have taxable income less than $157,500 if single or $315,000 if married.
A less business-friendly change applies to meal and entertainment deductions. Before, 50 percent of meals and entertainment costs were deductible, but no more! You can’t deduct entertainment costs at all and meals only get the 50-percent deduction if they’re small and you have receipts.
Some options exist, though, that may make up for that missing tax break. First, have your accountant look at your forecasted income. Thanks to the new tax law, you might owe less on your last quarterly payment than you think. You can also purchase a piece of capital equipment (think computers, furniture and machinery). If you buy it and start to use it before 2018 ends, you can deduct up to $1 million.
Should you be looking to pass on your business to one of your children, now would be a good time. The estate tax exclusion is at an all-time high of $11.9 million for individuals or $22.36 million for married couples. That means, in most cases, you can pass your business on to your children tax-free. It’ll slide back down to $5 million in 2026, that is unless Congress decides to change it first.
Also, take advantage of one perk that wasn’t changed with the new tax laws: retroactive tax refunds. Approximately 93 percent of business owners pay too much in taxes annually. If you’ve paid for the last three years, you can have a review done that shows potential missed tax savings.
Regardless of how well you think you know the changes, it’s important to work with a qualified tax professional before filing. They’ll know the ins and outs and be able to see you through any confusing regulations.
We are not tax professionals at Idea Custom Solutions, but as the leading provider of graphic services ranging from embroidery digitizing to vector artwork and image editing, we are dedicated to your business. That’s why our tagline is: Your success. That’s the whole Idea!”