The 500-page tax bill made large, sweeping adjustments that can affect you business and hustle down the line. In order to prepare, you may need to shift some things around or make some changes to ensure that you don’t lose a lot more than you need to lose. Since the tax bill is here, the best thing that we can do is to try to figure out a way to outsmart it.
Here are 3 ways that the tax bill will affect your hustle and what you can do to outsmart the system:
Boss Inc.
Everyone knows at this point that the corporations will get the biggest break with taxes by going from a 35% tax rate to a 21% tax rate. This rate will largely effect startups and freelance bosses. It is with this in mind that startup and freelance bosses should start thinking about themselves and their expenses instead of claiming freelance money.
Non-Profits
Unfortunately, Non-profits will be hit hard. The new law will make deductions for charitable donations non-existent. This means that if you donate to a charity of your choice you can no longer claim that deduction. This mandate will hurt the for-profit businesses that have given large amounts to non-profits and the non-profits that have relied on big donations to keep running. The only way to out smart this change will be for the non-profits to consider a different structure.
S Corps
As we have established previously, the corps get the biggest tax breaks. In 2017, S-Corp bosses were seen as a pass through business that included partnerships, limited liability companies, and sole proprietorships. Pass through businesses could pass their income to their owners who pay taxes at the individual rate. Now, owners can only apply a 20% deduction to their business income. A tax break is probably the reason you decided to become an S Corp but with the changes maybe it’s time to consider becoming a C corp.
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