New tax law means big changes for businesses
WILLMAR — The new federal tax reform law will create significant changes for businesses and could provide financial tax advantages.
But as the new tax season rolls around, the new law presents questions and challenges for businesses.
"Business owners now have more tools in the tool box to dial in their tax results which creates opportunities but complexities all at the same time," said Joel Gratz, a certified public accountant and director of taxation at Christianson PLLP of Willmar.
To help businesses sort through the top issues of the new law, the Willmar Lakes Area Chamber of Commerce is hosting a tax planning workshop from 7:30 to 9 a.m. Friday at the Oaks at Eagle Creek.
A panel of experts from five area CPA firms will discuss the "most requested questions they're getting" about the tax changes, said Ken Warner, Chamber president.
"We want to make sure businesses are staying on top of the issue," Warner said.
The forum, which costs $10 and is open to the public, should help business owners "get ahead of the game," he said.
Gratz said the biggest change is the new Section 199A qualified business income deduction, which affects sole proprietors and pass-through entities including partnerships and S corporations.
According to Gratz, this deduction can lower an individual's taxable business income by 20 percent. But he said there are a "number of calculations and limitations built into this deduction" that have the potential to lessen the impact of the deduction.
The other big item in the new law is the increase in first-year expenses of capital equipment.
Gratz said first-year capital expensing up to $1 million is allowed annually and "the return of bonus depreciation" lets taxpayers write off 100 percent of the cost of capital equipment.
In Gratz's view, the tax changes "should have a significant reduction in federal income taxes and free up cash flow for future business growth and expansion."
In order to maximize the new deductions, he said business owners should work closely with their CPAs to complete more detailed tax planning.
"Without planning, a taxpayer could get phased into more deduction limitations and leave money on the table," Gratz said.
For more information about the forum call the Chamber office at 320-235-0300. RSVPs are required by Wednesday.