Tax write-offs are used by many small businesses to offset the costs of operating their business and increase their earnings. With the introduction of a 2017 tax law that eliminates immediate deductibility, many small businesses are finding that they owe taxes this year and won’t be getting the refund they may have been relying on. Software firms, biotech companies, and others that rely on specific types of funding, including research grants, may not be able to claim the same small business tax deductions that they have in the past.
Popular Small Business Tax Deductions
Small businesses rely on tax strategies deductions to make ends meet and maintain cash flow. Grants for research and developing new products can no longer be deducted at the end of a given year. Instead, they are being spread over several years. Other operating expenses are now being handled in the same way, leaving small business owners paying the IRS large amounts of money that many don’t have and can’t acquire through loans or other types of funding. Small business tax deductions are meant to help your business, not hinder them. That is why it is so important to be financially prepared. Talk to a financial advisor if you have questions or concerns about how the new tax laws will affect you.
How Do Tax Write-offs Work?
Tax write-offs are deductions that small businesses can take that offset the cost of their day-to-day operations. The purpose of a tax write-off or deduction is to reduce the amount of taxable revenue a business must claim. This ensures that they are able to operate their business and still earn enough money to pay their shareholders dividends. Most tax write-offs are claimed at the end of the year in which they occurred. The 2017 tax law does not allow for immediate deductibility, instead, the deduction must be taken over several years.
What Can Businesses Do?
There are several things a business may be able to do to limit the amount of taxable income they report or at least make what they owe to the IRS more manageable. Creating an account with the IRS and setting up an installment plan will help you remain in good standing and will keep your payments more manageable. You can also apply for a working capital loan that will provide you with the funds you need to pay off any outstanding tax debts you may incur in the future. Being prepared is the best way to manage any unforeseeable financial obstacles. Working capital loans are not considered a form of income because they must be paid back. This type of funding may work in your favor and provide you with the cushion you need to maintain financial stability. Instead of worrying about being overwhelmed by the limits being placed on your small business tax deductions, take the steps you need to prepare for your business’s financial future. Apply for a working capital loan designed to help your small business succeed. Preparing for financial hardships before they occur is the best way to make your way through them successfully.