You’re not the only one confused by the tax issue. While it’s true that it might be the opportunity of a lifetime for many companies, tax expert David Jones of GreerWalker says it’s time to proceed with caution.
Should you change your filing status to drop your tax rate from 37 percent to 21 percent? What’s the risk of double-taxation? What happens if I’m selling through a flow-through company?
Jones shared a few insights ahead of enlightening the audience at SCMFG’s event, “Tax Break Impact on South Carolina Manufacturing”, Thursday Feb. 22, in Greenville (details here).
SCMFG: The next tax law is pretty much a no-brainer, right?
David Jones: A lot of businesses are thinking it’s a simple decision, I should become a C-corp, but when they come to talk to us, we make it a little complicated for them. It’s not something that should be done very quickly, but you have to think about what you’re going to be doing five years from now, even 10 years from now before you decide to make that change.
What size companies are struggling?
Our client base is between $5 to $400 million in gross receipts. The majority are between $10 to $200 million, and all of them have questions like this.
What are some of the hidden benfits of the new law?
If you look at your individual expenditures or income, you may be able to count them towards your 2017 or 2018 filing to maximize the benefits. However, each case is unique.
Can you give some examples?
Prepaid expenses on the books are an asset on your balance sheet, not an expense. However, if the prepaid expense relates to the next year, you can change your method of account for that expense and take the deduction. (Most often, this happens with prepaid insurance)
Other oppotunities include a businesses’ accrued salaries, bonuses or commissions. You could also accrue payroll taxes associated with different types of wages. Again, accruing those expenses would push an expense onto the income statement in 2017. That creates the benefit at a higher tax rate.
See details and event registration here.