Greaves | Wu quoted by Spark Business regarding tax changes and small businesses

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Joshua Wu was quoted by Capital One’s Spark Business publication regarding new tax proposals that could impact small business owners. Some of the potential changes and issues for small business include: 

Reduced pass-through business rates

“Some lawmakers have proposed reducing the business income tax rate of pass-through entities—such as S corporations, most LLCs and partnerships—to 15 percent. Most small businesses operate as ‘pass-through entities,’ which means they don’t pay income taxes at the corporate level; instead, corporate income passes through to the owners, and income taxes are levied only at the individual owners’ level.”

Uncertainty from a tax planning standpoint

“Because changing a business structure can be costly, from a tax and professional fee standpoint, most business planners seem to be holding off on modifying existing structures until we have more clarity.”

Incentive to classify workers as independent contractors

“For instance, some employees may want to be classified as independent contractors to benefit from new corporate tax rates that could be lower than the individual income tax rates, Wu says. However, ‘this could create some challenges for small business owners because the penalties for misclassifying workers as independent contractors, rather than employees, are significant,’ he says.”

Repeal of estate tax

“Some clients who are looking at business succession planning are hoping that tax reform will include a repeal of the estate tax. Thus, they are holding off on making taxable gifts of shares in their business in the event that the estate tax—and potentially the gift tax—are repealed.”

See the full article here.

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