Now that TY2017 is behind us, it is time to turn our greedy eyes towards the savings possible for you and your Chicago 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 fully established, but we do know that it requires a few things:
- That you actually have a Chicago business
- That this Chicago 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 Chicago 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.
Again, this is just for the purposes of being a helpful voice to you… I don’t presume to have all of the answers, but I *have* seen a few Chicago entrepreneurial businesses work pretty darn well in my day.
(And one thing every one of them had was a proactive tax advisor.)
Now … let’s talk about going out on your own.
Three Tips On How To Succeed as an Entrepreneurial Business Owner in Chicago
“Life is not holding a good hand. Life is playing a poor hand well.” -Danish Proverb
In years past, being an “entrepreneur” in Chicago could carry a negative connotation. The general public (or “civilians”, as one of my business owner friends from Chicago refers to them) associated business owners with insanity. After all, who would invest everything they had into running a business in Chicago that may or may not succeed?
Well, people like Steve Jobs changed all that.
Business ownership in Chicago 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: Too many of the “new” generation of entrepreneurs in Chicago 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 Chicago company, read Michael Gerber’s books (The E-Myth series). But, I think you probably inherently understand how critical it is to make your Chicago 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 Chicago 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 Chicago families and business owners. And we always make room for referrals from trusted sources like you.
A.L. Taylor and Associates, PC