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Proposed tax changes could increase profits for small businesses

Small business operators in North Carolina should keep a close eye on the tax reform that might emerge at the federal level. Tax code changes proposed by President Trump could provide some relief and allow businesspeople to keep more of their profits.

Cuts of 15 to 35 percent could reduce corporate taxes if tax reform goes through. The president said that he wants to lower taxes on sole proprietorships and freelancers as well because they currently pay a higher rate of personal income tax. If Congress passes the president's tax proposals, the lower taxes could lead to higher profits. That situation could enable business owners to sell their businesses for larger amounts because valuation would be higher. Proposed alterations to personal and business taxes might also change the tax bracket of business owners. This could reduce the capital gains tax for people who sell established businesses with high values.

The changes to trade agreements desired by the president, however, might negatively influence the profit margins of businesspeople who depend on importing cheap parts or products and selling them domestically. Someone facing that possibility might wish to sell a business before trade issues impact profits.

Seeking out legal advice from an attorney familiar with buying and selling businesses could be an appropriate step for a person who wants to purchase or sell an existing business. An attorney could inform the person about the financial records that need to be disclosed during a potential sale. After looking at the income, debts, tax obligations, and assets of a business, an attorney could advise the person about the value of the business. Negotiations about the terms of sale could also be managed by an attorney, who could work to protect the client's interests.

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Proposed tax changes could increase profits for small businesses | Britton Law, P.A.