Business Tax Deductions: Do You Qualify?

Last Updated on April 4, 2018

According to the National Federation of Independent Businesses (NFIB), the state of the current economy is the best it’s been in over thirty years for businesses nationwide. This is largely due to new economic policies put into place by Trump’s Tax Cuts and Jobs Act, including business tax deductions, and less government regulation
Does your business qualify for these business tax deductions, and how do they work? National Business Capital & Services’ financing advisors broke down the plan to answer these questions:

Qualified Types of Businesses for Tax Deductions:

Under Section 199A(a) of the new tax codes, nearly all types of pass-through businesses qualify for the new business tax deductions, which include:

  • Sole Proprietorships: Any unincorporated business owned by a single person.There is no separation between a sole proprietor and their business. Because of this,  proprietors pay personal income tax on the profits made by their businesses.
  • Partnerships: Unincorporated businesses owned by more than one person. Similar to sole proprietorships, business partnerships are not subjected to corporate taxes.Instead, all credits, business tax deductions, and income “pass through” to the partners themselves, based on individual tax rates.
  • Limited Liability Companies (LLCs): Businesses with qualities of both partnerships and corporate entities.Just as with partnerships and sole proprietors, income tax is passed through to the owner or owners of an LLC, with no taxes imposed on the business itself.However, they differ from partnerships in that owners of LLCs enjoy the added benefit of corporate liability protection from company debts, lawsuits, and other business issues.   
  • S Corporations: Corporations that choose to have business profits and deductions pass through to the owners of the S Corporation themselves.These corporations avoid the double taxation faced by other corporations, as the individual owners are taxed separately from their business, based on their individual tax rates.

Exceptions from Business Tax Deductions:

These business tax deductions do not apply to business owners who are married and make over $315,000 in annual business income, and $157,500 if singleNearly all service-oriented businesses are eligible for Trump’s business tax deductions, with the exclusion of engineering companies, law practices, and architectural businesses.

Deduction Benefits from the Tax Cuts and Jobs Act:

With over 90% of all businesses in the US falling under the category of “pass through entities,” Trump’s Tax Cuts and Jobs Act is one of the most beneficial pieces of legislation to the small business economy in many years. These benefits include:

  • Business Tax Deductions: The owner or owners of pass through entities are eligible to receive a 20% drop in their taxable income with Trump’s new business tax deductions.This is providing enormous financial relief for small businesses nationwide. With the breathing room provided by these business tax deductions, business owners are more financially ready to overcome any business challenge, and seize any and all opportunities for growth.Business owners from every industry are capitalizing on this period of economic growth by contacting the financing advisors at National Business Capital & Services, who provide financing options for businesses of all sizes, regardless of credit score and extensive financial history.
  • Equipment Financing: Before the Tax Cuts and Jobs Act was put into effect, the IRS did not allow businesses to completely write off equipment purchases in a single year.Instead, the old tax code only allowed 50% depreciation on equipment, which was limited purchases of only new equipment, with costs of $500,000 and under.With Trump’s Tax Cuts and Jobs Act, depreciation on equipment purchases has shot up to 100% for purchases totaling $1,000,000 and under, and now applies to both new and used equipment.This gives businesses the opportunity completely write off all equipment purchases in as little as a one year.With these new policies in place, now has never been a better time to make the equipment purchases your business needs to grow and thrive.National is currently flooded with calls from business owners wanting advantage of this opportunity by securing their equipment financing options, which make equipment purchases easier and faster than ever before, while saving them time and money in the process.

What About C-Corporations?

Small business owners aren’t the only ones feeling the benefits of Trump’s new tax plan. The Tax Cuts and Jobs Act lowers lowers the tax rate of C corporations from 35% to 21%, which is the lowest the corporate tax rate has been since 1939. With lower taxes than ever before, opportunities to grow and expand C Corporations are sprouting across the country.
National’s financing advisors are currently working with C Corporations to secure financing options that help seize opportunities for growth, including commercial mortgages, small business loans and franchise financing.

Small Businesses: NOW is the Time for Growth and Expansion!

With less financial strain due to reduced taxes and deregulation, the Tax Cuts and Jobs Act is giving business owners the ability to grow and expand their businesses in ways they haven’t been able to for many years. 
According to NFIB’s Small Business Economic Trends Survey taken in January, 2018, 32% of small business owners are saying that “Now is a Good Time to Expand—” the highest recorded percentage since the survey’s creation in 1973. 
Data collected from NFIB’s Small Business Optimism Index scored small business’ optimism in the US with 106.9 points as of January 2018, which is the highest score since the economic collapse of the early 2000’s.
The financing advisors at National suggest making sure you secure the capital necessary to take full advantage of this incredibly exciting time for the US economy, and join in on the ongoing success story of small business owners nationwide.

business tax deductions do you qualify

Next Steps:

Contact one of National’s expert financing advisors at (877) 482-3008, available 24/7 to answer any questions, and advise you on how to take advantage of Trump’s business tax deductions. Or, fill out National’s 1-minute application online, and receive funding in as little as 24 hours.

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About the Author, Megan Capobianco

Megan is passionate about helping business owners along their journey - providing them with relevant content they can use in their day-to-day operations.

Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advise from National Business Capital & Services and the author. Do no rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely in this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there maybe errors, omissions, or mistakes.