You’ve probably heard of some of the tax changes that hit small businesses this year. As an accountant, I try to stay on top of some of these changes, and as a business blogger, I wanted to make sure that I communicated some of these events to you.
If you are a KHBOffice client, you will be seeing this in your March newsletter, but for everyone else…here goes. If you want to get the newsletter, by the way, just sign up by going to our homepage, scrolling down and entering your email in the newsletter field in the bottom right.
Meals & Entertainment is no longer deductible in 2018. Well, there is a but. Most of what you recognize as M&E is not deductible any longer (and it has been only 50% deductible for years, so there is that). Many of the business owners I speak to regularly are not aware as of yet, and in all honesty I was only alerted to this fact by an accountant friend. (I didn’t believe her. I had to Google it). Spoiler. It’s true. You can still deduct travel meals, but client entertainment meals are a no go, and even travel meals are headed for the chopping block in 2025 (yeah, long way off, a lot can change). If you are an accountant, and have any inkling that your clients aren’t aware of it – it is time to blow your bullhorn! Get the word out, because a lot of people are going to be surprised.
This article by The Daily CPA explains the situation pretty well. Once you catch your breath, read on…
This next item is something that should be read in detail as well. If you have watched the news, you’ve probably read about the Federal key rate going up. Most of us immediately equate that with mortgages, but fact it that it affects all debt tied to the federal rate (variable rate lending). Business owners and people in general may want to review their statements, and measure the impact this may have.
You can read more by USA Today here.
Case in point – if you open a credit card statement this month, you will probably notice that if you are paying minimums or a little above, the payment from last month did not have the impact it used to.
These are a few items that have popped up and had a direct effect on many business owners. It goes to show the importance of regular bookkeeping and account review. If you are making payments or entertaining clients and are not paying close attention to your books, the above items could give you a nasty surprise later in the year.
On the flip side, much of tax reform has had a positive impact on many businesses, and you can read more of the nitty gritty here. A decline in the corporate tax rate, as well as declines in withholding tax are making employees as well as employers happy.
Additionally, if you like investing, have a 401(k), or (like me), have been dipping your toes into the stock market and learning what you can, this has been a good year (except for that awful correction!) so far but could get nuts. Inflation is an issue, but if you are looking to build wealth, now is the time to speak to your investment advisor or do your homework to see if any opportunities exist (I am not a stock/investment advisor or expert, nor do I consider myself anything but basically advised. I’m just learning myself).
Please note that the above is not to be construed as advice to your situation. Do your homework, ask your accountant, and go from there. And, as always, please correct me or let me know I’m an idiot. Looking forward to your feedback!