WHAT TAX REFORM CAN MEAN TO SMALL BUSINESSES.
The American economy cannot exist without small business. The sector creates two thirds of jobs in the U.S. and many experts believe that freeing up money to help them invest more in their business is critical.
According to most surveys the number one concern of small businesses is almost always taxes. Taxes have long been a concern of businesses large and small, but now more than ever with the economy still in recovery it seems even more important.
The new tax reform passed by the Trump administration promises to lighten the burden for individuals as well as businesses. The reforms to individual tax rates will affect small business owners who are often taxed on their income at individual tax rates. When it comes to individual taxes, the president has has reduced the number of tax brackets from seven to three, with tax rates of 12 percent, 25 percent and 35 percent. The rates had ranged from 10 percent to 39.6 percent.
For businesses the proposal reduces the business tax rate from 35 percent to 20 percent, which is hoped to have the effect of making American companies more competitive with other companies around the world while translating to new jobs at home. Sole proprietorships and partnerships also get a 25 percent tax which would be lower than the individual tax rates many have been paying.
Making it easier to prepare taxes is expected to have a significant impact on small businesses and individuals. Taxes have been so complicated that a small business owner could spend weeks with tax preparation.
The new tax bill seems to be the right thing at the right time, but some are still skeptical. According to a recent survey, the number of business owners who expect changes in tax policy to have a positive effect on their business in the next 12 months fell form 42 percent to 31 percent.
Whether these new tax laws do the trick to stimulate the economy is yet to be seen.
By UNIKO Media Group