With the U.S. unemployment rate hitting a five-decade low of 3.7 percent in October, the good news keeps on rolling for small businesses in America, although a strong growth period brings its own unique sets of challenges for business owners. Recent tax cuts and continued deregulation are bolstering bottom lines for businesses throughout the country, with payrolls growing thanks to an increase in available small business tax deductions. Owners are being forced to find creative ways to grow their operations. As companies get ready for 2019, there are at least four ways small business owners can take advantage of the current economic climate and use this time to fortify their operations and prepare for the coming year.
1. Use “immediate expensing” to make strategic long-term investments.
The recently-passed Tax Cuts and Jobs Act (TCJA) now allows businesses to immediately expense depreciable tangible assets — things like manufacturing equipment, or computers — in the year in which they’re purchased. In previous years, small business owners were required to depreciate tangible assets over the life cycle of those assets. This means that now could be the ideal time for your small business to invest in the technology, equipment, or other resources it might need for expansion. The new allowance is currently only set to last through 2022, after which the “original use” provision will be reinstated. Under the old rules, only the first owner of a depreciable tangible asset is able to qualify for immediate expensing.
2. Eliminate debt and build up cash reserves.
With the corporate tax rate reduced to 21% earlier this year – plus a significant boost in available deductions for capital equipment — small business owners should have more cash on hand to continue to invest and grow their businesses. Savvy owners should use some of that cash to pay off credit card debt, mortgages, or Maine Fha loan . Doing so can help get businesses on better financial footing and can help secure additional credit when needed. Alternatively, businesses can build up their existing cash reserves to increase flexibility and ensure a better-stocked “rainy day fund.”
3. Keep current employees happy, and consider hiring new ones.
When the unemployment rate gets as low as it is currently, it can be a challenge for companies and small businesses to hire and retain qualified, knowledgeable employees. Business owners can get ahead of this challenge by keeping their current employees happy and motivated. Since the passage of the TCJA earlier this year, hundreds of businesses have passed corporate tax savings on to employees, through increasing wages, boosting contributions to 401(k) accounts, and/or adding new employee benefits. Moves like these can help businesses retain their best team members while simultaneously creating a more attractive work culture for potential new hires.
4. Take control of company financials and strategic planning.
It can be daunting to navigate the intricacies of tax requirements, deadlines, and tax strategies available to small-business owners. That is why it is critically important for entrepreneurs either to take a crash course in accounting themselves or to surround themselves with knowledgeable, creative professionals that can maximize their business’s potential and take cumbersome administrative tasks off their plate. At Infinit Accounting you will get a best outsourced accounting service. Utilizing services like 1-800 Accountant can help small business owners concentrate more on developing new business and providing solutions to clients, while a team of qualified tax and accounting professionals manages the company’s bookkeeping, taxes, and overall financial health. Cindy Hoskey, the founder of Agile Dragon Consulting, said she felt “insecure and nervous” about the accounting side of starting her own business. After beginning a partnership with 1-800 Accountant, Hoskey says: “I have the confidence I need to know I can both succeed in my business as well as take care of my family.
Mike Savage is CEO and co-founder of 1-800Accountant. He was previously employed by PricewaterhouseCoopers. Mike received a 2018 Glassdoor Employees’ Choice Award honoring the Top CEOs in the category of small and medium-size businesses (SMB) in the U.S.
