The Payroll Blog

News, tips, and advice for small business owners

small business owners prepare for tax changes

Small Business Owners: Prepare for These Tax Changes

Posted On
Chris Bibey

Tax season may be many months away, but before you know it the calendar will turn and April 15th will be staring you in the face.

Tax season may be many months away, but before you know it the calendar will turn and April 15th will be staring you in the face.

Small business owners need to keep a close eye on their tax situation throughout the year.

There are several new tax changes to be aware of, many of which could impact your situation.

Note: speak with your accountant about these changes, ensuring that you are prepared and dealing with each on in the appropriate manner.

Business News Daily recently discussed five tax changes small business owners need to prepare for.

1. The Affordable Care Act. This could change your company's tax planning in many ways, especially if you have more than 50 employees or are closing in on this number. With enforcement beginning for most employers in 2015, you don't have much time left to prepare.

2. Corporate tax rates. Corporate tax rates are discussed time and time again, with this issue to be examined in upcoming tax-reform proposals. Could tax rates be lowered for corporations in the near future? This could be one of those tax changes that saves your company money.

3. The reduction or elimination of tax credits. Not all tax credits last forever, and some that many companies rely on could be on their way out sooner rather than later. For example, Section 179 gives business owners the ability to deduct the cost of a particular asset, such as equipment, in the year it was purchased as opposed to spread out over several years. The deduction limit last year was $500,000, however, it decreases to $25,000 in 2014.

4. Tax extenders. This bill is intended to renew $85 billion in temporary tax breaks for businesses as well as individuals. With 50 tax breaks included in the bill, there is a good chance your company is benefiting from at least one.

5. Net investment income tax. This is not as much for companies, and more for high-income individuals (such as some small business owners) that have a significant stock portfolio, real estate income, or other passive streams of income.

In 2013, the 3.8 percent net investment income tax was put into effect. This year may be the first time you are impacted by the tax.

Are you prepared for these tax changes? Don't wait until the last minute to deal with these. If you do, you may find yourself scrambling as filing deadlines close in.