What Will the New Tax Policies Mean for Small Business Owners?

small business new tax policies

Many small business owners have questions, but the answers are not easy to obtain.

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Let's begin with ten key questions which best represent the most common questiona asked by small business owners regarding the new 2018 tax law:

  1. Will my company have a tax savings in 2018?
  2. Does it make a difference if I am an LLC or an S or C Corp?
  3. Do I have to revise my bookkeeping procedures?
  4. How long will the lower tax rates be effective for individuals and for businesses?
  5. How do I prepare cash flow projections for the next few years taking the intended changes into account?
  6. Will I be able to expense depreciable assets?
  7. Will health insurance be affordable for my employees?
  8. If I purchase inventory from outside of the U.S. will the costs of goods increase?
  9. Will my bookkeeping and accounting costs increase in 2018 as a result of the change in tax policies?
  10. Should I consider owning rather than leasing real estate? Will ownership be beneficial or detrimental to cash flow?

From my perspective as a financial consultant for small business owners there is only one certainty – confusion. 

Few professionals have the answers to these and many more questions. And no one professional has all the answers.

The information that has been provided to date is general information, relating to income groups; not individual entities. Each business will have to evaluate the benefits that relate to his or her financial condition. It may be several months before we have answers to the questions that concern individual entrepreneurs.

When small businesses are hampered by these monumental questions relating to their businesses, they retreat. They hold on to the status quo. They avoid expansion programs. They avoid further risks.

 This passive posture is antithetical to the nature of the entrepreneur.

Taking on debt

In my role of financial advisor to hundreds of clients, I am hesitant to position businesses to take on additional debt until there is a better understanding of how they will be impacted by the new tax policies

I intend to discuss the options with lenders, who also are currently in the dark.

Lenders are in the business of making loans, but they must evaluate their risks; which may increase or decrease, depending on the stability of the business, and how the tax changes will impact the operations and the net income; both pre-tax and after tax. I find myself reevaluating growth strategies for individual clients.

I intend to assist them in examining the risks and the opportunities, taking into consideration the uncertainties. 

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About the author

Marjorie Weber

Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 16 years: combining business training programs with one-on-one mentoring. Marj is currently the executive director of Primed2Grow, a Miami based consultantcy. Most recently Maj was a financial advisor for Florida SBDC at FIU. She was Chair of SCORE Miami Dade from 2010 to 2014. She also serves as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has  facilitated workshops under the auspices of Miami Bayside Foundation, Little Haiti Cultural Center and .local banks. She commenced her career as a real estate investment banker in New York and Miami..She uses these long term relationships to assist her clients in accessing capital. She knows both the process and the people and has assisted in providing financing for hundreds of businesses in Miami Dade.