The recent passage of a new tax bill has a lot of small businesses excited — and rightfully so. But before you go about investing a tax refund you have yet to receive or changing the structure of your business to get a more favorable rate, it can help to get some expert insights.
Michael Trabold, director of compliance risk for payroll and HR firm Paychex, recently spoke with me as part of Small Business Trends’ exclusive Smart Hustle Report. During the conversation, Trabold shared some insights on the new tax legislation and how it might have an impact on small businesses.
He said, “There’s going to be a lot of really good stuff that comes out of the rule and some excellent opportunities from a tax perspective. But right now there’s still quite a bit of ambiguity. And until the rules come out from the IRS in detail, it’s going to be a little bit tough to determine exactly what path you should take.”
Because the legislation and other tax and payroll issues can be so complicated, Trabold shared some tips specifically for small businesses. You can listen to the full conversation here.
How Small Businesses Should Handle the New Tax Act
And check out some of the top insights below.
Approach Business Ownership with Cautious Optimism
The new tax code appears to be a big win for a lot of businesses. And Trabold also argues that the Affordable Care Act allowed a lot of people to consider business ownership after its passage, due to the ability to access and afford coverage even for those without employer sponsored coverage. So it can be a good time to start a business — as long as you’re willing to do the research and hard work.
Trabold says, “Generally, I think it’s a great time to start a business. And I think this situation with tax reform is only going to make it better. Again, I think everyone needs to go into it with their eyes open though. It still is a very complex regulatory environment.”
Use Restraint When Reacting to Changes
Some of the changes that have business owners most excited include the lower corporate tax rate and deductions for pass through businesses like LLCs and sole proprietors. However, businesses that might want to make changes based on what they think might help them come tax time should wait to actually see how the changes impact their specific situation. There might be some parts of the law that impact certain industries differently or some income thresholds that could make the changes less impactful for some business owners.
Trabold adds, “We’re cautioning folks in small businesses that there’s an awful lot of rules about how this is all going to play out that are going to be very specific to your own situation.”
Get Help from Experts
Making sense of all the changes can sometimes seem like a full time job, especially during times of flux. So if you don’t want to spend all of your time learning about tax codes and laws and regulations that could impact your business, it can help to work with financial experts like those at Paychex.
Trabold says, “The business is always ultimately accountable, but having a company like ours that is really an expert in all of this minutia can be really, really helpful.”