This post originally appeared on the Louisiana Technology Park blog.
The Tax Cuts and Jobs Act that was passed by Congress and signed into law in late 2017 affects all taxpayers in at least some way, but the sweeping legislation has profound implications for small businesses — both positive and negative.
The vast majority of the changes took effect on Jan, 1. Accountant Quintina Ricks, managing partner at Ten40 Solutions in Baton Rouge, a tax firm with a focus on small businesses, says with so many new tax regulations already on the books for this year, now is the time for companies to begin understanding the effect those changes will have on their operations.
Here are three ways the tax-reform measure is already affecting small businesses.
Under the legislation, the top tax rate for large businesses registered as C corporations dropped permanently from 35 percent to 21 percent starting in 2018. This will have a limited impact on small businesses since relatively few are structured in this way.
There are, however, other benefits in the tax measure that apply across the board to businesses of all sizes — specifically provisions that offer more generous write-offs for certain expenses. For example, qualified property purchases for business — such as cars, computer equipment or office space — are now fully deductible through Jan. 1, 2023. The limit for expensing equipment purchases also doubled to $1 million starting in 2018.