As an Arkansas business owner, tax preparation is most likely on your mind this time of year. Many people are also concerned about newly implemented tax laws and how they will affect business tax returns. The Callen Accounting Group, PLLC in Mountain Home recommends getting acquainted with these changes to ensure you know what to expect when filing your taxes this year. Below, they discuss how a few different enterprises are impacted when filing their tax returns.
How Are Pass-Through Entities Affected?
The Tax Cuts and Jobs Act changed the way pass-through businesses are taxed. These entities are those where the owners use personal tax rates when paying taxes on business income. These include LLCs, partnerships, and S corporations.
According to new laws, most pass-through businesses will see a reduction of 20% on all taxable business income. Most businesses are considered pass-through, which means cuts will impact a broad range of enterprises. Businesses that provide a professional service (such as accounting and law firms) can also access the reduction, but only if their taxable income is less than $315,000.
What About Corporations?
Tax rates for corporations were also greatly reduced. While in previous years the corporate rate was 35% on income over $10 million, it’s now been decreased to 21%. The goal of these cuts is to attract corporations to the United States thanks to more favorable tax codes. Conversely, tax cuts for small businesses are intended to make them more competitive with larger enterprises.
Understanding new and existing tax laws can be a real challenge for the average business owner. The experts at The Callen Accounting Group, PLLC can help business owners and individuals in the Twin Lakes area make sense of complex codes to ensure their tax returns are filed efficiently and accurately. Take advantage of their expertise by calling (870) 425-6066 today. Visit them online for more helpful tax tips for small business owners.