A new tax reduction for business owners was added to the newly signed tax law. This new tax law makes provision for individuals and estates to reduce their business income up to 20%. Another new rule that has been making News headlines is the "Pass through" rule. This new rule applies to income from business enterprises like S corporations, partnerships, Limited Liability Companies and sole proprietorships. The new law also made provision for tax payers who fall under the new 37% tax rate bracket to be taxed at 29.6% from January 2018.

There are many rules, restrictions and limitations surrounding the new tax law that might reduce or even terminate the deduction. Although, the new tax law will open doors for business owners, there are limitations or factors that apply, some of these factors are; the nature of your business and how large your taxable income will be in 2018.

To explain further, once your taxable income reaches $415,000 for some service businesses' reduction is no longer allowed. Some of these service businesses' include the following; Law, financial and brokerage services, health and accounting.

The deduction has restrictions, the following businesses' are under the restrictions; businesses' that take part in investing, deal in securities, partnership interest or commodities.

Manufacturing businesses' with over $416,000 as its taxable income are under restrictions from the deduction based on their total entry wage. Also, restriction on personal earning could also result in the reduction of your personal tax deduction.

With the restrictions and limitations of the new tax deduction, it is best to critically analyze how these deductions and its restrictions will affect your business in 2018. All we did here was to scratch the surface, the new tax law has several provisions that could benefit you and your business, so we will love to set up a meeting with you to discuss the best ways to take full advantage of this new law, and also how to ensure that the restrictions does not affect your business.

We will definitely follow up to set up that meeting with you.