Coming soon: An updated accounting rule will cause some companies with complex, long-term contracts to recognize revenue earlier than in the past. Plus, a narrow provision of the Tax Cuts and Jobs Act will tie revenue recognition for book purposes to income reported for tax purposes; it may also require advance payments to be taxed before they’re recognized on the financial statements. The net effect of these accounting rule and tax law changes could be substantially accelerated tax bills. Contact us to discuss how the changes will affect your company.
The S corporation business structure offers many advantages, including limited liability for owners and no double taxation (at least at the federal level). But not all businesses are eligible, and S corps may not be quite as attractive from a tax perspective as they once were. The C corp tax rate is now only 21%, while the top individual rate is 37%, so double taxation may be less of a concern. On the other hand, S corp owners may benefit from the new qualified business income (QBI) deduction, which can be equal to as much as 20% of QBI. Contact us for details.