https://www.youtube.com/watch?v=W1UpHGh7Pf0

Trump's tax reform has made a lot of big changes to the tax code.  Because of the overhaul, our proactive tax team posted a series of blogs outlining the changes and what they mean for you.  When we read them, we knew right away that we wanted to share them with you. So, we brought Dustin Griffiths back on the podcast to share the changes we think are most relevant to the small business owner.  We're also sharing the links to all of their blogs to help you gain more clarity.

Disclaimer: We've published this content for educational purposes only.  For individual recommendations and advice for your specific situation, please consult with a qualified tax professional.

Listen to the Podcast

This conversation expanded on each of the following topics.  We discussed examples and situations to help you understand how the changes will apply to you.  To gain the greatest understanding, be sure to listen to the conversation.

Where Taxes Fit into the Cash Flow System

Strategically (and legally) shrinking your tax liability is a huge part of fixing your money leaks.  But it’s just one small step of a greater journey of building time and money freedom.  

That’s why we’ve put together the 3-step Entrepreneur’s Cash Flow System.  

The first step is keeping more of the money you make.  This includes tax planning, debt restructuring, cash flow awareness, and restructuring your savings so you can access it as an emergency/opportunity fund.  This step frees up and increases your cash flow, so you have more to save, and consequently, more to invest.

Then, you’ll protect your money with savings, insurance and legal protection.  Locating and solving your money leaks is just a temporary bandaid if there’s risk that you could lose it.

Finally, you’ll put your money to work and get it to make more by investing in cash-flowing assets to build time and money freedom and leave a rich legacy.

How Trump's Tax Reform Affects You

Corporate Tax Rates

Corporate tax rates went down from 34% to 21%.  However, C corps pay a double tax.  They're taxed at the corporate level and again at the individual shareholder level when you pay yourself.  Your total tax rate must account for both, and may effectively create a total tax rate of 36 - 51%.

20% Deduction for Pass-Through Entities

Pass-through entities, like partnerships, S corporations, and sole proprietors, now will only have to claim 80% of business taxable income.  However, there are additional calculations if your AGI is over $315K or ($157K if you're single), and for service-based businesses, to determine if and how you can use this deduction.

This is a “YUGE” tax savings for many small business owners!  Without doing anything differently, many of you are going to get a 20% reduction of your business's taxable income.

Vehicle and Asset Purchases

Asset purchases have received an expansion of the Bonus Depreciation and Section 179 definition, as well as the depreciation limits.  This allows you to deduct 100% of the depreciation up front, in many cases, being able to fully expense the purchase price in the first year, for new and used assets.

This expansion puts more dollars in your pocket for large asset purchases.  However, the true test to determine whether to purchase an asset is whether you needed it in the first place.

Business Expense Changes

You can no longer deductions meals and entertainment expenses unless you use them for your employees.

If you find that you had a lot of these entertainment expenses or eating out with clients, business just got more expensive.

Changes in Real Estate Tax Laws

For residential or commercial real estate investors, the reform simplified the definition of property improvements and limited the 1031 like-kind exchanges to real property.  Additionally, rules to inventory, including real property, allow you to deduct the purchase of inventory up-front...