From where I stood, as the CEO of sweetFrog Frozen Yogurt, I was delighted that the new tax was signed into law. In fact, I was proud to play a small role in the process, as I had asked for much-needed tax reform in a November 2017 Op-Ed that ran in Virginia Business. I firmly believed that small business owners needed tax reform to thrive, and I was happy to see our government work together to pass mission critical legislation.
Now, regardless of what you think of President Trump as a man and a leader, I’d like to offer some reassurance that the Tax Cuts and Jobs Act will help small-business owners build on the fantastic momentum generated by the American economy in 2017. The stock market is up, jobs are up, sales are up, and this tax reform may help small business owners do even better in 2018.
Here are four reasons why I believe Trump’s tax reform will provide economic jet fuel for small business owners from coast to coast:
Tax rates have been reduced.
As you likely are aware, small businesses will be receiving a deduction of 20% for qualified business income. But, back in the day (that is, before December 22, 2017), income from a small business would pass through to the proprietor on their own taxes, and these individuals were sometimes saddled with income tax rates as high as 39.6%.
The new tax rates are certainly fairer to the business owner, which should encourage more people to take the leap and start their own business. There have always been countless reasons that interested entrepreneurs have wanted to join the sweetFrog family, but, at the same time, I can’t help but think that we and every national franchise now have another selling point. We can remind interested owners that they’ll pay a lower rate on their taxable income than they would have if they had purchased a franchise a year earlier.
But, that deduction does more than just help the business owner. It helps the business itself, and now owners will have more money freed up to hire more people and to invest more in infrastructure.
