Best Practices, Feature, Operations, V5I1

It’s Tax Time

It’s a whole, new ballgame when it comes to taxes.

“This is going to be everyone’s first year with the new tax law,” says Michael Dinich, a financial advisor and personal finance blogger in Pennsylvania. 

That’s due to the Tax Cuts and Jobs Act of 2017, which went into effect in December 2017. The act didn’t impact taxes filed for 2017.

Mark S. Gottlieb, a Manhattan CPA and namesake of MSG Accountants, Consultants and Business Valuators, calls President Donald Trump’s updated IRS Code “the most significant change to the tax law in the last 30 years.”

The approximately 4,000-page IRS Code includes many changes that impact personal and business taxes. For example, says Dinich, a huge update under the new code is that the child tax credit is now refundable. That means taxpayers with child tax credits will be refunded money they can use for financial planning, such as funding a 401(K), he says.

Itemized deductions on personal taxes were also eliminated. Therefore, do your best to transfer what would have been itemized personal deductions to the business side of the ledger, says Dinich. Examples include mortgage interest, property taxes and donations to charity.


It is common knowledge that Tax Day 2019 is fast approaching. However, according to Steve Smith, a California small business coach, consultant and owner of GrowthSource Coaching, a small business owner should start getting prepared for taxes in a year’s first quarter—for the following year.

In the first quarter of the year, “Go through all the financial agreements you have, like subscriptions and insurance plans. Don’t just assume you are getting the best bang for your buck” because you invested in or purchased something the prior year, says Smith. 

For his part, Dinich urges small business owners to create a tax budget “in June, not January. If you missed the opportunity the take advantage of tax deductions, jump on it earlier” in future years.


For Dinich, the biggest mistakes small business owners make when it comes to taxes is “waiting until tax season to do some planning.” Doing so increases the likelihood the entrepreneur will lose many tax benefits they might have enjoyed had they started and completed tax planning the prior calendar year.

Smith agrees. 

“By the time people wait until the end of the year, their (tax deductions) are gone,” he says. “They should be thinking about taxes at the beginning of the year, making now the right time to act to avoid that oversight.”

Another mistake Smith says many of his clients make is not hiring a CPA, accountant, or bookkeeper to handle the business’ tax needs. 

“Sit with them to have them tell you where you should be rightsizing your expenses,” he urges.

Dinich says small business owners often err by depreciating the value of their equipment too quickly. 

“The problem with that is the IRS uses a progressive tax code. If you depreciate an item too quickly, some of the tax savings of depreciation” can be lost, he says.

Another huge misstep to avoid is not keeping and organizing receipts throughout the year. Sometimes, this behavior causes entrepreneurs to improperly “co-mingle business and personal finances and they become indistinguishable,” says Gottlieb. 

Under the IRS Code, doing that is illegal.


Many shed builders and RTO companies are largely cash businesses, and Smith has advice for entrepreneurs in that situation.


“Cash will be important in 2019 because all trends and prognostications say 2019 may be a rough year in the stock market,” he says. “Imports are also questionable.”

Smith also urges cash-dependent business owners to tighten controls on their cash expenditures. Investigate whether there is business inventory that costs too much or is not being utilized. If there is, sell or transfer the items to reduce your company’s financial burden. 

“Businesses with a strong cash flow will be better able to handle the (economy’s) ups and downs than businesses that are heavily leveraged,” he says.

According to Gottlieb, another consideration for small business owners to determine for tax purposes is whether they file under the cash basis or the accrual method. 

If a business files its taxes under the cash basis method, the company owner should be certain to “pay all bills by the end of the calendar year to ensure the company gets its deductions,” he says. 

Businesses that file their taxes using the cash basis report their cash income when they receive it and report their deductions when they get them, he says. 

Conversely, under the accrual basis method, business owners should review their accounts receivable and identify those amounts that are not collectable or that will be received by the end of the calendar year. 

Yet another matter all entrepreneurs should assess is whether their entity “needs fixed assets, such as furniture, fixtures, machines, etc., and purchase them before the end of a calendar year to use accelerated depreciation (benefits) and deduct the entire cost of the equipment as opposed to depreciating the cost of equipment over its useful life,” says Gottlieb. 

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