New regulations and laws are constantly in flux. But it’s important to know what could be immediately impacting your business. Here are the 2018 laws that affect small business.
Tax Cut & Jobs Act
Passed in late 2017, this tax overhaul meant plenty of changes for businesses in 2018 and beyond. Here are a few of the elements within the law that could affect you.
Corporate tax rate
The maximum corporate tax rate was reduced from 35% to a flat 21%.
Pass-through entity deduction
The majority of U.S. businesses are categorized as pass-through entities. These include partnerships, S corporations, limited-liability companies (LLCs) and sole proprietors. The deduction of their business income is now allowed up to 20%. There are, of course, strict requirements attached to this deduction.
Health insurance penalty
Although this doesn’t change the filing requirements, the individual mandate penalty has been reduced to $0. While it wasn’t repealed, reducing the penalty to nothing has practically the same effect.
Section 179 deductions
The deduction for the full purchase price of leased or financed equipment was doubled to $1 million and the phase-out increased to $2.5 million.
Bonus depreciation deduction
This deduction was increased from 50% to 100% and made retroactively affective as of 9/27/2017. It will remain in effect until 2022, after which it starts to gradually fade out.
Business meal and entertainment deduction
Do you wine and dine your clients? These entertainment expenses are no longer deductible under the new tax law.
Same-day ACH Payments
In late 2017, the same-day ACH (Automatic Clearing House) entered the second phase of the system, processing debits up to $25,000 in a single business day. In March of 2018, the last phase will start. The third phase requires financial institutions to make credits received through same-day ACH available for withdrawal by 5pm local time. These changes make cash flow management easier for small businesses.
Other Looming Regulations
There are many laws on the horizon that have the potential to affect small businesses. CBIA highlights the below as key items to be on the watch for:
- How states will implement federal tax reform
- Comprehensive paid family leave started in New York state in 2018, and more states may enact legislation in the future
- New federal overtime regulations could be adopted by 2019
- Concern about pay equity is leading some states to push legislation that limits the use of salary history in the hiring process
- With cybersecurity threats, more legislation may pass to enforce data security and privacy surrounding biometric data
- Many states have started created state-sponsored retirement plans
If you have questions about any of the above laws or trending regulations, please ask us in the comments below! We’d be happy to answer any questions about how these laws could affect your small business.