The Tax Reform Act of 2018 officially known as the “Tax Cuts and Jobs Act” will create immediate benefits for many small business. Not a fan of reading anything a .gov site? Me either – but challenge yourself to do so and learn what your options are. Not paying attention and failing to act during the allotted time period could cause unnecessary expense and missed opportunities.
The Good News:
The IRS has announced a temporary 100% expense deduction, for certain business assets which have a depreciable life of up to 20 years. can now be taken in the same tax year. This is huge. It means if you invest in qualified assets which can include machinery, equipment, computers, appliances and/or furniture, put them into service before the end of 2018 your business will get 100% deduction verses the allowable depreciation.
If you’ve been waiting to upgrade your technology, kitchen equipment or furniture, it’s time to take a strong look at whether or not it makes sense to do so now. The clock is ticking. This may not have been a current priority with everything that’s going on but an opportunity might have just presented itself to you. It’s critical to surround yourself with a team of advisors you can rely on and trust. This team will be built over time and the players will change. Financial advisors should be treated and included as partners in your team, because they are. Your financial advisory team should include an accountant, a tax lawyer, a banker, an investment advisor, and an insurance advisor. They may have differing opinions and that’s not all bad. You’ll want to get as many perspectives as you can when you are making critical decisions. If you have a formal strategic plan, your plan will now serve as a guide as to whether or not investing in new assets makes sense. If you’ve been thinking of modernizing your space, or creating a new theme or were planning to replace or add technology it’s a good time to review the opportunity now.
Sometimes financial professionals earn a commission and sometimes they don’t. Anyone you work with should be very transparent regarding how they get paid. In my experience the financial advisors that are willing to invest time with you whether or not they are earning any short-term benefit are the ones you want to keep in your inner circle.
Ask questions until you fully understand all of your options. Ask the same question to different professionals to get different perspectives. Don’t hesitate to ask a professional to define acronyms and financial terms. They should be very willing and readily able to explain any term or concept clearly.
Lastly review the original documentation and announcements yourself at the IRS Tax Reform site so that you can be as informed as possible as you evaluate all the benefits that might be available to you.
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