Ben Wyant knows a thing or two about construction. Building homes, planning projects and even overseeing his team of 11 comes easy for him. Taxes, however, are a different matter. The owner of B & J Construction in West Frankfort had not been in business very long when he discovered all of the time and effort required just to handle record-keeping, withholding and taxes.
Wyant says he’s glad his business has grown to the point where he has a bookkeeper who takes care of tax and payroll now because it was beginning to take a lot of his time.
“It’s a big, big thing and you have to keep up with it,” Wyant says. “It was probably about 20 hours you need to invest every month trying to keep everything lined out so that you can get your withholding and quarterly taxes right.”
He says that’s time which otherwise could be spent on the job or with something else even better.
“That’s time that you would want to spend with your family because as a small business owner, you really are working as many as 80 hours a week, just keeping everything going. Every minute with your family is important.”
Like many other business owners and leaders, Wyant would love to see things be simpler. Even with recent changes to income tax regulations, simplification of tax codes seems elusive — at least when it comes to business owners.
Lacie Henson, a CPA with The Center for Financial, Legal and Tax Planning in Marion, says things have gotten simpler for individual tax filers — those people who traditionally have been able to use an IRS 1040A or 1040EZ form.
“If you’re one that just has a W-2 and not many other things to include, you really can file your tax returns on a half sheet of paper — front and back. If you look at the personal tax forms this year, that’s what they look like. They’ve removed several of the items that used to be on the 1040 and they’ve put them on additional schedules now,” she explains.
Henson says that standard deductions for single individuals and married couples have been increased as have child tax credits for 2018 returns.
“And the one thing about a tax credit is it is way better than a deduction,” she says.
But it’s not-so-fast for business people, David Powless, CPA with Kemper CPA group in Marion adds.
“On your personal return, you’re going to look at a half-page with six schedules behind it, but for business people, it hasn’t gotten any simpler,” he says.
In fact, new regulations and a new deduction are throwing some curves at filing 2018 tax returns.
“When it comes to the new tax laws, for those people who are sole proprietors, farmers, people with partnerships, S corporations and some others, they have a new deduction. It has nothing to do with cash, but it is 20 percent of taxable business income on your personal return. However, there are a bunch of limitations and new regulations; some that aren’t even out yet,” he cautions.
Henson adds, “If you have a pass-through entity, which would be a partnership, S corporation or sole proprietorship, most business taxpayers may be able to take a 20 percent deduction — 20 percent of their profit is not taxable and a majority of business owners will qualify for that. It’s very important that people remember that “Qualified Business Income” deduction. There is a separate form for that.”
As enticing as an additional deduction sounds, both Henson and Powless are encouraging their business clients to be patient in filing their 2018 returns. Powless says the IRS is still refining and releasing regulations.
“We can’t file some returns yet because we don’t have all the answers; the IRS hasn’t got everything worked out yet,” he says. “We have two meetings a week in our office for questions and answers, the status of returns and things like that. Every week the IRS is coming out with new rulings. It’s a good time for business people to be gathering materials and let’s get started.”
Powless continues, “I’ve only filed a few returns so far this year because the IRS has not yet approved most of the forms. I recommend people definitely make sure that everything’s been approved and that they [the IRS] is not going to make any more changes. Don’t rush into doing your taxes.”
Because of the ever-changing nature of tax policies and regulations, handling taxes yourself can be both complicated and time-consuming. Wyant says it was that realization that led him to use a third party for his company’s taxes.
“It’s a big thing, especially if you don’t keep up with it,” he says. “You have to own it. It is still your responsibility to make sure that everything is fine with it.”
Powless says it is not out of the question for business owners to do their own taxes, but he recommends getting some help.
“There’s just a lot to deal with,” he says. If you want to try this on your own, I would suggest at a minimum maybe having somebody else review it.
Henson recommends professional help.
“I think you will get more for your money by using a professional to make sure that they’re covering all of the basis and keeping up,” she says, adding that there are advantages to building relationships with a tax preparer. “Continuing to use the same one and having it consistent from year to year just really helps because the professional gets to know you and the business. Sometimes when I sit with my clients and talk, there are things that pop up in conversations that maybe I didn’t know in the past and it’ll be, ‘Oh my goodness, you get a credit for that!’ It helps to have a strong relationship with your tax professional.”
She also suggests that business leaders think about taxes all year long, not just at filing time.
“Record keeping from the very beginning is a lot easier than trying to figure it all out later,” she says. “It’s important to make sure that your categorizing things correctly in your records throughout the year. And, consider hiring a bookkeeper. They are worth their weight in gold and I tell you, when it comes to tax prep, it makes our job a lot easier.”
Wyant agrees. After all, he says he’d rather be building than dealing with taxes.
“It’s nice not to have that load on us,” he says.