Tax day has come and gone, and we wanted to get a feel for what effect, if any, it had on small businesses around the nation. If you asked to see a show of hands by those who did better because of the Trump Tax relief, you would see the majority of hands of entrepreneurs in the air. Competent CPA’s were able to decipher the new tax bill and pass that knowledge on in the form of saving money to their small business clients.
A recent study conducted by the cloud hosting firm Right Networks found some interesting data regarding businesses, the labor market, and President Trump. Of the survey’s respondents, 97% said they were either “satisfied” or “very satisfied” with their CPA’s knowledge of the new tax rules and 68% said that their CPA correctly anticipated the impact of the tax changes on their business and guided them on how to take advantage. Chalk one up for the accountants.
While the survey certainly exhibited a “happiness” factor for businesses, it also revealed two other things that should concern both Republicans and Democrats as we head into the 2020 election season. In all likelihood, businesses plan on keeping any tax savings in the bank, or possibly using a portion of it to increase inventory levels.
The downside of this is that hiring will not be a priority as much as it was in 2018. Right Networks’ CEO, Joel Hughes, said in a statement, “Many of us still harbor memories of the Great Recession and are being more conservative with our profits.” The politics of trade and tariffs may not play out how you see it on MSNBC, et al. Again, according to the survey, “It’s Democrats who may need to be worried about something else: 46% of the respondents viewed Republicans as more favorable to the success of their business, compared with 38% who thought the same of Democrats.”
Capital One’s Spring 2019 Small Business Growth Index found similar results in their most recent analysis. A few bullet points echo the sentiments of the Right Networks surveys.
- Slightly more than half (51 percent) of SBOs say the tax plan has been positive for small business.
- Male business owners are more likely to say the plan has been positive for small business (57 percent), compared to 41 percent of female business owners who say it has been helpful.
- Twenty-one percent of SBOs expect to pay more in taxes this year, up from 19 percent who expected to pay more in Fall 2018 and 11 percent one year ago.
- Fifty-three percent of business owners think they will pay about the same.
As noted time and time again by entrepreneurs, much of the macroeconomics is out of their control. The Trump Tax cuts were a classic example. They knew they were coming, but didn’t really know what to expect.
Looking in the rearview mirror currently after the first tax season, the majority seem okay with the results. One year does not make a tax return, so keep in close contact with your CPA through the remainder of this calendar year to make sure you are taking full advantage of what is rightfully yours.