Economy

Key Tax Reforms to Keep Small Businesses Running

Small-business and advocates are raising concerns as President Donald Trump and the GOP rush to implement the planned tax reform. The group is exposing how taxing issues are making them struggle and the changes they would like to see.

According to a survey, taxes consistently place at the top of the issue list for small business, ahead of health care and regulation. More than 2,200 respondents responded in the survey which was released in later September.

“Smaller businesses really are, in a lot of ways, the drivers of the economy,” stated CPA Robert Bernstein, a partner in Grassi & Co.

Freeing up money to aid the investments more towards their business is critical as viewed by experts with the sector creating two-thirds of U.S. jobs.

Trump proposed different kinds of tax-reform measures that same month, covering both individuals and business. The Senate approved a Republican-backed fiscal 2018 budget last week which will grant permission for Republicans to pass tax legislation through the senate with a minimum of 50 votes.

“The vast majority of small-business owners pay taxes through their individual return,” says Dave Yeske, CFP, managing director of Yeske Buie who is also the director of Golden Gate University’s financial planning program.

The survey results show that the percentage of business owners who yield expectations for changes in tax policy to have a positive effect on their business within the next 12 months, decreased to 31 percent from 42 percent quarter-over-quarter. Although there was an increase in small-business owners who believed that the changes wouldn’t have an effect, about 33 percent to 40 percent, while 27 stated that it will cause a “negative effect”

Tax Brackets for the New Policy

Outside shot of small businesses

 

The president has proposed an outline for individual taxes where the number of tax brackets from seven to three, including tax rates of 12 percent, 25 percent and 35 percent wherein the current rates stand at 39.6 percent from 10 percent.

For the businesses, the corporate tax rate would decrease from 35 percent to 20 percent, a proposition that experts say will make American companies more competitive globally.

Along with Trump’s plans, he is also proposing a 25 percent tax on sole proprietorships and partnerships, otherwise known as pass-through businesses, which is lower than the regular individual tax rates many presently pay.

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