IRS broadens Business Tax Account access for S corporations, partnerships, and adds Business Tax Transcripts view
The landscape for small business tax planning could see dramatic shifts in the coming years. As tax advisors prepare their clients for potential changes, understanding both the opportunities and risks becomes crucial for strategic planning.
The Corporate Tax Question
The cornerstone of proposed changes centers on corporate tax rates. While the current rate sits at 21%, proposals to lower it to 15% could reshape entity choice decisions for many small businesses. This potential shift demands a fresh look at how we guide clients through entity structure decisions, especially for those straddling the line between S-corporation and C-corporation status.
TCJA's Uncertain Future
Perhaps the most pressing concern for tax practitioners is the looming expiration of the Tax Cuts and Jobs Act provisions. The popular Qualified Business Income deduction has become a cornerstone of tax planning for pass-through entities, and its potential sunset could significantly impact small business tax strategies. Immediate expensing of capital investments, another TCJA favorite among small business owners, also hangs in the balance.
Service Industry Gets Special Attention
Service-based businesses might find themselves in an unusually favorable position. Proposals to eliminate taxes on tips could revolutionize compensation structures in the hospitality sector, while suggested overtime pay tax exemptions could reshape payroll strategies across various industries. These changes could open new avenues for tax-efficient compensation planning.
The Regulatory Relief Picture
Banking and lending regulations could see significant loosening, potentially making capital more accessible to small businesses. For tax advisors, this might mean incorporating debt restructuring into tax planning conversations, especially for clients looking to expand or refinance under potentially more favorable conditions.
Tariffs and Supply Chain Considerations
The trade landscape could shift dramatically with proposed broad-based tariffs of up to 20% on imports. For small businesses in the supply chain, these changes could necessitate a complete rethinking of pricing strategies and supplier relationships. Tax practitioners will need to help clients navigate these waters, particularly in understanding how tariff costs affect overall tax planning.
Planning in Uncertain Times
Smart tax practitioners are already preparing multiple scenarios for their clients. The key lies in developing flexible strategies that can adapt to various outcomes while maximizing current benefits. This means keeping close tabs on depreciation strategies, entity structures, and compensation planning.
Beyond the Numbers
The most valuable service tax advisors can provide right now isn't just number-crunching – it's helping clients understand the broader implications of these potential changes. This means looking beyond pure tax considerations to business strategy, cash flow management, and long-term sustainability.
A New Advisory Role
Today's tax practitioner needs to wear multiple hats: tax expert, business advisor, and strategic planner. As these potential changes loom, our role increasingly involves helping clients navigate uncertainty while positioning their businesses for success under various scenarios.
The proposed changes could represent the most significant shift in small business taxation in recent years. While uncertainty remains about which proposals will become law, tax practitioners who help their clients prepare now will provide the most value. The key is to maintain flexibility in planning while taking advantage of current benefits – a balancing act that defines modern tax practice management.
For now, the wisest approach is to help clients make sound decisions based on current law while building in flexibility for potential changes. This measured approach, combined with regular strategy reviews, will help ensure small business clients are prepared for whatever changes may come.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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