It's been nearly six months since the new tax bill passed, yet many business owners are still trying to determine the nuances of the bill and understand the impact it could have on their business. What risks do I need to avoid? What advantages exist for my business? Will I be impacted personally? What changes do I need to make today?
If you're one of those CEOs, I've got two jobs for you: One, develop a basic understanding of key changes that are in effect and whether they apply to you. Our report on tax implications for small and midsize businesses can help. Two, team up with a great certified public accountant who can explain what the tax law means for your company and, help you understand different scenarios that can optimize your tax benefits.
How do you know if your tax professional is the best partner for navigating these changes? Put their skills and knowledge to the test with these five questions that were recommended by tax experts from the Vistage community.
1. How are you calculating my income as a result of the tax act?
Ideally, your tax professional should take your 2017 taxable income and show you what it looks like under the old tax rules versus the new tax rules. This should help determine the best game plan for your business based on your unique circumstances.
2. What changes should I consider for my business?
A good certified public accountant will walk you through a series of choices that can impact your tax liabilities. These might include choice of entity, qualifications for new deductions, different depreciation lives and methods, and whether you could change your accounting practices.
3. What guidance do you rely on to understand the complexity of the new provisions?
Smaller firms often look to the larger accounting firms as well as the Treasury and IRS for interpretation of the provisions. In addition, on June 20 the Treasury and IRS are due to issue proposed regulations and undated guidance on some of the more complicated and far reaching provisions of tax reform. Ask your accountant what resources they rely on, and if they are aware of any updated guidance that might impact your business.
4. How can I educate myself about the tax act?
Check to see if your accountant's firm has published any articles about tax reform that are relevant to your situation. If not, ask them for recommendations on articles you can read to learn more about key points in the law.
5. Can we have a conversation about all of the scenarios?
It's always a good idea to sit down and have an honest conversation with your accountant about your plans for the future. When you share your long-term business goals, your tax professional can make recommendations to best prepare you for the future you envision.