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Position Your Small Business to Grab These 2019 Tax Breaks

The tax topic on everyone’s mind for the next couple of months is sure to be their 2018 tax returns. Depending on your corporate structure, you probably have an eye on one of two due dates: March 15 and April 15. But you should train your other eye farther down the road. You still have most of the year in hand, meaning you have a long time to plan out and prepare your business to collect a number of lucrative 2019 tax breaks.

Did you notice in December how many stories about last-minute tax tips popped up? We joined the fray, too, because we know there are thousands of business owners out there that didn’t use the full year to actually map out a full-fledged tax strategy.

Big mistake.

By researching potential tax deductions and credits now, you have many months to make the necessary expenditures and jump through all the qualifying hoops it takes to lower your tax burden. That said, here’s a look at some 2019 tax breaks to start working toward:

Build Up Those Assets: Rules concerning the purchase of new and used business assets have become more generous under the 2017 tax overhaul. You can write off the full purchase price of qualifying assets – covering things from equipment to vehicles to even software – that are bought or financed in 2019, up to $1 million. There’s also a spending cap that makes this a very small-business-focused write-off. Once you reach $2.5 million in asset spending, the deduction phases out dollar-for-dollar and disappears entirely at $3.5 million in asset spend.

Work From Home: If you use any space in your home specifically and regularly for work purposes, you can save a little bit on your taxes – as long as you meet a couple conditions. For one, you can’t claim a “multi-purpose” space: If you sit on your laptop in your bedroom, your bedroom isn’t eligible for the deduction. Also, your home must be your principle place of business. That doesn’t mean you can’t do any of your work on the road or occasionally in an office, but it does mean can’t claim your home office if you spend most of your time working from some other corporate headquarters. There are two options for determining the deduction: a complicated method that matches work expenses against home expenses, and a simplified method introduced in 2013 that just goes by square footage ($5 per square foot up to 300 square feet of space).

Paid Leave: There’s a temporary tax credit in place for 2019 that benefits employers who offer paid family and medical leave to employees. This credit typically is equal to 12.5 percent of the wages they pay out to employees while out on leave. There are numerous rules governing which type of employees are deemed “qualified” and what constitutes family and medical leave, among other things.

Eat Up! The new tax law brought down the hammer on most forms of entertaining clients. Expenses such as tickets to sporting events, going golfing or any other types of activities are off the table. That said, one form of “entertainment” still can be taken off your tax bill. The IRS, in a recent set of clarifications about the tax law, said that food is still can be deducted at 50 percent. So as you plan out your business outings for the year ahead, remember: You can wine and dine clients … you just can’t take them out the ball game.

Watch Your Losses: Businesses still can take deductions for net operating losses (NOLs) – where tax deductions outstrip taxable income – but the benefits have been pared back under the new law. For one, NOLs, which once were allowed to offset up to 100 percent of a given tax year’s taxable income, are now limited to 80 percent. Moreover, NOLs previously could be carried back two years and carried forward 20 years. Now, they can no longer be carried back, though they can be carried forward indefinitely.

These are just a handful of the 2019 tax breaks that small businesses should be on the lookout for. But getting through the full list, determining which ones you qualify for and making the appropriate plans to capture those benefits … that’s not a one-person job. Look to McManamon & Co. for help. We offer small and mid-size businesses a full suite of tax services and can help you map out the coming year.

Thousands of dollars worth of tax breaks are easily within your reach. Call McManamon & Co. at 440.892.9088 or contact us online today to make sure they don’t slip away.

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