{"id":3626,"date":"2018-03-02T10:02:05","date_gmt":"2018-03-02T15:02:05","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=3626"},"modified":"2026-02-12T05:27:37","modified_gmt":"2026-02-12T10:27:37","slug":"tax-reform-opportunities-and-threats-for-business-owners","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/tax-reform-opportunities-and-threats-for-business-owners\/","title":{"rendered":"Tax reform: Opportunities and threats for business owners"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tTax reform: Opportunities and threats for business owners\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"Dan\t\t\t\tDan Morris<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

This is part one of a three-part series outlining the critical changes impacting small and medium-sized businesses as a result of new tax reform legislation. Part one of this series focuses on the generalities, concepts, and key new provisions from a macro perspective. Part two<\/a> focuses on business implications. Part three<\/a> examines the impacts to individuals, their families, and their estates. <\/em><\/p>\n\n\n\n

Tax laws and policies are far more complicated than necessary. Period. Regardless of how you feel about taxes, all members of our communities are obligated to contribute their fair share. As tax advisors, we guide our customers as they navigate the complex world of tax compliance.<\/p>\n\n\n\n

Sometimes these journeys are like a slow meandering river and other times it is akin to running a class V rapid. With the passage of the recent tax reform act, the Tax Cuts and Jobs Act of 2017, our tax landscape has been uprooted and, in many ways, violently changed.<\/p>\n\n\n\n

Change is good. Revolutionary change is chaotic and unnerving. <\/mark>This new tax legislation has created tectonic shifts in traditional planning. <\/em>The shifts impact corporations, pass-through entities including partnerships and S-Corporations, sole proprietorships, professional service organizations, individuals, families, and estates.<\/p>\n\n\n\n

Candidly, this is the \u201cmost sweeping tax reform since 1986,\u201d and in fact, makes some massive changes in how many Americans will be taxed. It should be noted that as sweeping as the reform is, within its first sixty days, there have already been changes. So, strap your seat belt on tight and prepare for a wild ride as we all traverse our new tax landscape.<\/p>\n\n\n\n

Provisions<\/h2>\n\n\n\n

The \u201cAct\u201d is full of unique provisions. First, many provisions are \u201ctemporary\u201d and expire in ten years. These expiring provisions were necessary to meet budget deficit limitations. These changes are forecasted to add $1.5 trillion to our accumulated deficit.<\/p>\n\n\n\n

Additionally, while the laws were passed, the implementing regulations will require years to move through the Internal Revenue Service system and accordingly, you and your tax advisor will need to apply judgment to address many of these changes to your situation and any changes to your business financial planning.<\/p>\n\n\n\n

For traditional C-Corporations, the tax rate becomes a flat 21 percent rate. This is a dramatic reduction from the previous 35 percent rate. Also note that unlike many of the individual changes, the Corporate changes are permanent. Permanence though in tax legislation is frequently short-lived.<\/p>\n\n\n\n

Pass-through entities including most partnerships, LLCs, and S-Corporations, receive a 20 percent reduction of their taxable income. This means if your business generates $100,000 in regular taxable income, you’re taxed on only $80,000 of that income.  Note, professional service enterprises including accountants, lawyers, medical professionals and similar enterprises are excluded from many of these benefits.<\/p>\n\n\n\n

Bonus depreciation<\/a> is now unlimited. Expensing equipment purchases under Section 179 limit has increased to $1 million.  Real estate depreciation will be accelerated along with increases for limits on vehicles.<\/p>\n\n\n\n

Tax reform challenges<\/h2>\n\n\n\n