Tax Planning Strategies for Small Business Owners

As a small business owner, you have a lot to remember. And while you’re keeping all those balls in the air, sometimes the thing that gets pushed down on your to-do list is your tax planning strategy, so that at the end of the year you’re scrambling to make some last minute tax decisions. Instead of all that scrambling, this year you should plan your budget to include some of these tax strategies made possible by the Tax Cuts and Jobs Act.

Asset Additions

The Tax Cuts and Jobs Act allows you to claim 100% bonus depreciation on qualified new and used property additions that you acquire and place in service in the same year. This means that if you’re considering new property additions, you should budget for them now: plan to acquire the property and place it in service this year, so that you can claim the depreciation on your taxes next year. Your tax professional should be able to explain the qualifications and limitations of the types of property.

Heavy Vehicles

Like property assets, you may be able to claim 100% bonus depreciation on heavy SUVs, Pickups, and vans that are used over 50% for business, since they are treated as transportation. For this case, heavy refers to SUVs, pickups, and vans whose gross vehicle weight rating is over 6000 pounds. If you’ve been toying with the idea of upgrading or adding to your business vehicles, now could be the best time. Buy the vehicle and place it in service this year, and it could mean another big write-off next year at tax time.

Improvements to Section 179

The Tax Cuts and Jobs Act has also increased the maximum deduction for Section 179 from $510,000 to $1 million, for qualifying properties if they were placed in service in or after the 2018 tax year. There is no separate limit for qualifying real property expenditures. So if you’re making improvements to the interior of a non-residential building or considering expenditures on roofs, HVAC systems, fire prevention systems, or security systems, this may be a good year to do them, as you may be able to deduct those costs. It also removed the provision that prohibited deductions for personal property used in conjunction with a lodging facility business, like a motel, rental property, or apartment. This may be the perfect time to work these sorts of improvements into your budget since you’ll be able to write many and possibly all of them off next year.

PL Consulting Can Help You Plan Your Budget!

PL Consulting offers a diverse range of bookkeeping and other financial services. Each of our services is customized to fit the needs of our client and his or her business plan. Our team can help you with each step of your business from organization, to budget, to financial maintenance. We are located in Pikesville at 119 Old Court Rd Baltimore, MD 21208. Contact us at 410.764.3731 or info@plcfo.com so that we can assist you with your bookkeeping needs. Remember to stay up to date with everything PL Consulting by following us on our social media platforms via Facebook, Twitter, and LinkedIn.