3 Tax-planning Strategies

1. Consider a tax status change

As a small business owner, you can structure your business as a sole proprietor, partnership, limited liability company (LLC), S corporation or C corporation. Your business structure will impact how to file taxes for small business owners.

2. Take advantage of tax reform

The Tax Cuts and Jobs Act of 2017 (TCJA) created the qualified business income (QBI) deduction, which provides pass-through business owners a deduction worth up to 20% of their share of the business’s income — though it does come with many rules and limitations.

  • 25% of those wages, plus 2.5% of your share of qualified property

3. Leverage coronavirus tax relief

Congress has passed several pieces of legislation in the past two years to help small business owners through the COVID-19 crisis, including:

  • Coronavirus Aid, Relief and Economic Security Act (CARES)
  • Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA)
  • American Rescue Plan Act of 2021 (ARP)

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