Last December, as we all know, Congress passed into law a sweeping tax reform bill. Since then, many accountants have been advising their business clients not to make any big moves until certain parts of the bill--particularly the rules around the "pass-through" deduction--are clarified. Last week, the IRS issued proposed regulations that clarify the bill.

Lots of business owners I know have been concerned because the deduction may exclude those in the service industries or have other limitations that make it less attractive. Yes, there are limitations. But not as many as some--particularly those of us running small companies--think. If you're running a small business, here's what you need to know.

1. Some businesses will qualify, others will not.

For starters, you are running a "pass-through" business if you file an S-Corporation or partnership return. If you do not provide any services, then you are the deduction's main beneficiary. You can deduct 20 percent of your company's income. The remaining 80 percent will then be taxed at your individual rates (which for many have also decreased as a result of the 2017 legislation).

If you are a service business--a "trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets, or any trade or business where the principal asset is the reputation or skill of one or more of its employees" (as very recently defined by the IRS)--then you may still be able to take full advantage of the deduction...or perhaps not at all.  Please keep reading.

2. The amount of the deduction is not as limited as you think.

Let's say you're not a service business as defined above by the IRS. If your taxable income is less than $157,500 (individual) or $315,000 (married filing jointly), you are in great shape and can take the full 20 percent deduction. If you're above those amounts, then you can still take advantage but you'll need to meet certain tests (how much you pay in employee wages or what you've got invested in capital like real estate) to determine how much of the 20 percent deduction you can take.

Now, let's say you are a service business as defined by the IRS. Don't panic--yet. If your taxable income is less than $207,000 (single) or $415,000 (married filing jointly), then you can still take full advantage of the deduction. I have many clients who are below this threshold and this is good news for them.

But not so for those IRS-defined services companies that are making more. If that's you and your taxable income is above $207,000 (single) or $415,000 (married and filing jointly), then you're out of luck. You get no deduction at all.

One potential bright spot: There is an additional break in the recent IRS proposal. If your business has less than $25 million in revenue and your service arm accounts for less than 10 percent of this income, then you won't be subject to these caps.

3. You can't spin off parts of your business to take advantage.

It's called "crack and pack" and it has been floated in the accounting community ever since the law passed. The strategy would be for a business to break its service and non-service operations (i.e. collections, warehouse) into two and split them off. That way a business owner may be able to get around the pass-through deduction's limitations on service income. That move was kyboshed by the IRS in their recent proposed ruling. Any companies with "common connections" would be treated as one entity for purposes of this deduction.

4. Employees can't quit their jobs and come back as contractors to take advantage.

Say you're an employee at a company and you're paying employment taxes. Why not just quit and become an independent contractor? By doing so--assuming your revenues are under the limits--the pass-through deduction might exceed any self-employment taxes you would pay and it would be a net benefit. Brilliant, right? Well, forget that too. The IRS's recent ruling prohibits that move. If you're doing all the same stuff you were doing for your employer except now you're a contractor, then the IRS is going to presume that, for the purposes of this deduction, you're still an employee.

5. You still have time to give feedback.

There are still many areas requiring clarification and lots of debatable parts of this proposed rule. That's why it's just proposed. Comments are being taken by the IRS up until 45 days before their scheduled October 16 public hearings. The IRS has also just published a great FAQ that digs deeper into the rule.