With all the news about the devastation caused by Hurricane Harvey and Labor Day weekend looming on the horizon, it's easy to overlook the White House's increasing focus on tax reform.
This could have significant implications for small business owners and entrepreneurs, so it's important to keep any eye on these proposed changes.
Juggling the varying demands of starting, managing, and growing a business can be complicated enough -- and the current IRS tax code doesn't add any stress relief to the situation. Reforming tax policies and the current tax code represents a rare opportunity for bipartisan cooperation and collaboration.
This is also a situation that can directly benefit entrepreneurs. Running a business, developing new business contacts, expanding operations, and engaging with clients in a value-added manner clearly are the primary focus of entrepreneurs, but taxes are an issue that have a direct impact on the bottom line of every organization.
With all of the chatter around taxes and the potential for tax reform, let's take a look at some of the items that should be on any wish list for entrepreneurs and small business owners. This list is not meant to be all-encompassing -- it should serve as a sampling of some items that might benefit small businesses.
1. Reduction in complexity
Let's face it -- the current tax code is not a friend to anyone who has to interpret and deal with it as a business owner. Local, state, and federal taxes add layers of complexity to the tax filing process, and it's common knowledge that extra paperwork rarely adds value to operations. Simplifying the tax code, in and of itself, already represents a large potential improvement.
2. Accelerated cost recovery
While the Section 179 deduction is currently an item that is potentially being done away with, it's important to remember the importance of cost recovery to small business. Cost recovery, especially accelerated recoveries, reduce taxable income while also incentivizing small business to invest in growing the business.
3. Improved technology
Online filing systems and platforms have improved dramatically in the last decade, but integration with government agencies is still a work in progress. With so much, including business and non-business activities, being processed online, it makes sense that filing, and receiving information (including refunds) electronically, warrants a role on this wish list.
4. Lowering tax rates
We all know that paying taxes is never the most enjoyable part of running a business, and that lower rates would help increase competitiveness and profitability. Balancing lower rates with government spending and budgeting is a complicated issue, but, generally speaking, most businesses would support lower tax rates on the income they generate.
Taxes are a complicated issue that can, for many small businesses and entrepreneurs, seem like an overly burdensome process that does add substantial value to their business. Tax reform, proposed by the Trump administration, at least appears to be oriented toward reducing the paperwork and burden placed on small business owners.
There are numerous issues left unresolved, and that are still open to interpretation and debate, but this is an issue that is important to keep in mind as 2017 rolls forward into 2018.