Invest, Invest, Invest … Find Out in What!
Now that TY2017 is behind us, it is time to turn our inquisitive heads towards the savings possible for you and your Worcester business in the “new” tax code under the Tax Cuts and Jobs Act of 2017. And there are many ways to save with these new regulations.
One of the most talked about new deductions is the new 20% “pass through deduction” on qualifying business income. And, well, the full IRS guidance for taking this deduction hasn’t been completely established, but we do know that it requires a few things:
- That you actually have a Worcester business
- That this Worcester business is set up under a pass-through entity (like certain partnerships, S-corporations, LLC’s and sole proprietorships)
- That you are not a “service-based” business (more about that in a moment)
It’s not a requirement, but it’s becoming clear that it’s a good idea that you have someone from Worcester in your corner who is paying attention to the nuances here, and can help you navigate them to claim this deduction.
Now, about that “service-based” thing ...
Congress specifically excluded certain “specified service trade or business” income from qualifying for the deduction. For purposes of the 20% deduction, specified service trades or businesses are those that involve the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, and any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners.
That last part that I bolded is the hinge for this thing. We’ll dive deeper into it in the future, but I’d like to actually focus my thoughts today on #1 above: business ownership.
I thought I’d put together my thoughts on real-world entrepreneurship—and how to manage it now.
Now ... let’s talk about going out on your own.
Three Tips: How to Succeed as an Entrepreneurial Business Owner in Worcester
“Life is not holding a good hand. Life is playing a poor hand well.” – Danish Proverb
In years past, being an “entrepreneur” in Worcester could carry a negative connotation. The general public (or “civilians,” as one of my business-owner friends from Worcester refers to them) associated business owners with insanity. After all, who would invest everything they had into running a business in Worcester that may or may not succeed?
Well, people like Steve Jobs changed all that.
Business ownership in Worcester is now a badge of courage—something to be admired. In this economy especially, “business opportunity” companies are thriving. But here’s something you may be surprised to hear me say about these folks: yoo many of the “new” generation of entrepreneurs in Worcester want to play it safe.
They start a part-time company while still holding a regular day job. Or, they invest a little bit of money into a company, and back out when things become too difficult.
If this describes you, I have a little bit of news. You are a risk taker. Whether you would consider yourself one or not, you’re an entrepreneur … and, therefore, a risk taker. You took a risk in starting your company.
But are you holding back to the point where you’re stunting your growth?
Well, I can relate; I’ve never been known as a “freewheeler,” but I’ve learned a few things over the years about risk—and reward.
So here are a few “big picture” concepts you can use to guide your risk-taking decisions and still see large returns:
1. Invest in your education. The wisest entrepreneurs read about the successes/failures of others, and plan accordingly.
2. Invest in a system. If you do not understand the importance of having a system in your Worcester company, read Michael Gerber’s books (The E-Myth series). But, I think you probably inherently understand how critical it is to make your Worcester business scalable.
3. Invest in sales and marketing automation. Marketing is the key to growing your business. And, automation is a way to run your company while you work on growing your company. Rather than investing in expensive sales people, figure out a way to make sales online, or through other advertising media ... in a systematic, “hands-free” sort of way.
If you’re not taking risks, you will certainly not see the rewards of your efforts. Take the time to analyze the level of the risks you might be taking. But realize that without being willing to go out on a limb once in a while, you will never see the rewards you dream of.
Feel very free to forward this article to a Worcester business associate or client you know who could benefit from our assistance—or simply send them our way! While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Worcester families and business owners. And we always make room for referrals from trusted sources like you.
I hope this has been helpful. I don’t presume to have all of the answers, but I have seen a few Worcester entrepreneurial businesses work pretty darn well in my day. And one thing every one of them had was a proactive tax advisor. With an offer like the one below, this might help you or a colleague find the guidance you need ...
“No Charge” Return Review
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As a complimentary service this year, we will provide a
Return Review to Any Non-Client.
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Deadline: Friday, May 11, 2018