Christopher T. Coots, CPA discussed the future impact of the Tax Cuts and Jobs Act (TCJA) on private businesses in Az Business magazine, July/August 2019. Beyond his quoted comments, expanded questions and answers are below.
What is the one thing every business leader should know about tax reform that they might not know or might surprise them in the future?
Although most C Corporation tax law changes were made permanent under tax reform, the majority of the new tax law changes expire at the end of 2025. When considering a potential change in entity structure, evaluate the financial and operational aspects in addition to the tax impacts.
What can business leaders do now that will help them save money when they file taxes next year?
Tax reform created opportunities for companies with gross receipts less than $25 million to change their accounting method for tax purposes, i.e. accrual to cash. Consider implementing tax strategies before year end to defer income and accelerate deductions. Also, accelerate expensing for the purchase of qualified new or used property.
What is the best piece of advice you can give to business leaders in regards to best practices when it comes to preparing for next year’s tax filing and saving on their taxes?
Be proactive in tax planning and calculating projected income taxes due in 2020. Ensure sufficient quarterly income taxes are paid during the year to eliminate underpayment penalties. The IRS underpayment penalty rate gradually increased from 3% at the beginning of 2016 to 6% in the first quarter of 2019.
Contact Chris Coots to discuss the best tax strategies for your Arizona business.