Tax law changes can occur if and when the government puts money in the economy to kick-start spending during negative economic events. These law changes affect business owners. With Covid-19 came the payroll tax delay and the extended Tax Day deadline which have allowed businesses to hold on to their money to invest, retain employees and hire more people– all examples of what may come unexpectedly.
Tax preparation for the unexpected as a business owner
In a recent Forbes article, it was said that:
“…Businesses are currently able to deduct business interest up to 50% of their adjusted business income. This amount will decrease starting in 2021. In addition, the corporate tax rate is 21%, but presidential candidates have proposed increasing corporate tax rates. The decrease in the ability to deduct business interest and the potential increase in corporate tax rates make it more important than ever to have a continuous strategy in place to lower taxes.”
Staying prepared for these changes as a business owner is always important, but unexpected events make it all the more imperative. You must take the initiative to prepare for these changes at your own discretion. If not, you are at risk for being overtaxed as a business owner. According to Karla Dennis, the author of the mentioned Forbes article and Forbes Councils Member, your tstrategy should be comprehensive and look to maximize deductions, optimize deductions, and utilize credits and pending laws that may be “sunsetting.“
While the article states you should ultimately consult with a licensed professional for advice concerning your specific situation, it does also recommend deferring to the tax code. “One thing you can be sure about is that the tax code will always include opportunities for you to lower your tax burden,” it assures.
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