What are some ideas to implement in this climate if uncertainty? Here are five tried and true suggestions.
Typically, small business owners spend the last two months of the year huddled with their financial team and CPA, trying to hatch up some last minute ideas for saving themselves a few dollars on taxes.
While this year is no different, we have added complicating factors dealing with potentially a new tax law.
How does one make the right decision?
With 40 years of tax planning experience, and having lived through the Tax Reform Act of 1986, I have a few observations.
First, don't rush to judgment or overreact.
Early signals from the House and Senate suggests the Republican led Congress is struggling between the concept of real tax reform and simply creating some minor changes that can provide an appearance of reform.
With the Christmas vacation coming, and the recent gubernatorial losses for Republicans in Virginia and New Jersey, the Republican party has concerns the bill that does not further erode their current majority.
A second point deals with the deductibility of state and local taxes.
If lost, this could infuriate larger populations in high tax states like New York, California and New Jersey.
My prediction is that no significant reform will be achieved before December 31, 2017. However in the unlikely event that a bill does make it through both houses by Christmas, any major tax reduction provisions won't be implemented till 2018, 2019 or even later.
What are some ideas to implement in this climate of uncertainty?
I have five tried and true suggestions:
Do a rough tax projection for 2017, and determine what you will likely owe for April 15th 2018. With that in mind, start finding sensible expenses and deductions to pay.
1. Buy Equipment for your business.
If you want or need some equipment, buy it and make it operational before December 31.
That way, you can probably expense it all under the Section 179 tax expensing rule. While the new law will likely keep the expensing provisions in place, buy what you need now and get the write-off now, while tax brackets are as high as they are, But remember, only buy what you need.
2. Charitable giving.
Don't forget charitable giving. Whether its cash or simply cleaning out your closet of old clothes for the Goodwill or other charity you prefer, do it before December 31.
Make sure you document what you are giving away, with the thrift store values, the quantities and condition clearly spelled out according to IRS guidelines.
Next page- Ideas #3 through #5 to implement in this climate if uncertainty.
About the author
Raymond M Nowicki CPA is managing partner of Nowicki and Company, LLP, a firm with its headquarters in Buffalo, NY with a satellite in Manhattan. Nowicki is a nationally recognized speaker and trainer of CPAs on pension plan auditing, and quality improvement for CPA practices. His firm also audits 401K plans. Ray has helped Nowicki and Company, LLP grow to be one of the top 30 firms in Western New York. In recognition for service to small businesses, New York Governor George Pataki awarded him the Small Business Advocate of the Year Award in 2005. He serves most of the firm clients, especially in a number of specialized areas including estate planning and trusteeship, structuring new business ventures, strategic planning and workouts, and litigation support.Website