What Tax Reform Means For Small Businesses & Pass-Through Entities

Shutterstock One of the most significant changes under tax reform is the tax treatment of businesses. Unlike changes to the individual tax scheme, which are temporary and somewhat piecemeal, the changes to the business tax scheme are permanent and fairly comprehensive. It would be impossible to address all of those changes at once so I’m focusing on what I’ve been asked about most: how the new rules will affect pass-through entities and small businesses. First, a quick reminder. Currently, you can structure your business in a few ways, including: A sole proprietorship is the most simple form of business entity: Taxpayers do not file a separate tax return. Income and expenses from the business are reported on a federal form 1040, Schedule C. For the 2015 tax year, the IRS received over 25 million non-farm Schedules C. A partnership is an association of two or more persons to carry on a business and can take different forms (like limited or general…

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