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All business owners should perform due diligence on the changing tax laws and keep a detailed expense record to prepare for each tax season. — Getty Images/vitapix

With new and constantly changing laws, filing taxes for your small business can overwhelming. Taking advantage of deductions can save you hundreds or even thousands of dollars a year, but it can be tricky to know what you are allowed to deduct.

To help make the 2019 tax season easier, here some new and evolving tax regulations that may impact your business.

New mileage deductions

If your business requires you to do any driving, you can deduct your mileage. For the 2019 tax season, you can deduct your miles at 58 cents per mile(57.5 cents for 2020). You should keep a proper mileage log to back up your claims.

Tax Cuts and Jobs Act (TCJA) changes

Last tax season was the first year that taxpayers saw the full effect of the Tax Cuts and Jobs Act. According to Bret Scholl, CPA and founder of Scholl & Company, LLP, there's still a lot of confusion around how tax reform impacts small businesses, especially when it comes to meal deductions.

"The TCJA removed the 'directly related and associated with' requirements from business meals," Scholl told CO—. "The net effect of this change is to subject business meals once again to the pre-1963 ordinary and necessary business expense rules making it easier to qualify the expense as a deduction."

Additionally, the TCJA can benefit anyone who leases then purchases a vehicle for business use.

"The TCJA made two changes that mean 100% bonus depreciation is available on the vehicle you lease and then purchase, regardless of whether you purchase it during the lease term or at the end of the lease," Scholl said.

[Read: How Tax Reform Impacts Which Business Entity You Should Choose]

ICHRAs

In June of 2019, the IRS issued new regulations allowing employers to offer individual coverage health reimbursement arrangements (ICHRA) without offering a group health insurance plan. In other words, employers can give a designated, tax-free amount to the employee, who then uses that money to build their own health care plan.

ICHRAs, which may be offered by employers for tax year 2020, are an expansion of the IRS's existing policy, called qualified small employer health reimbursement arrangement (QSEHRA). This new type of arrangement can present many new tax benefits for small businesses.

According to Topher Reynoso head of health benefits compliance at Gusto, employers can write off these reimbursements as business expenses.

"This may not lower payroll tax liabilities the way group health insurance would, but it can certainly still be a savings for an employer," added Reynoso.

The best benefits and tax breaks generally require planning ahead.

Bret Scholl, CPA and founder, Scholl & Company, LLP

Out-of-state sales tax reporting

The Supreme Court decision of South Dakota v. Wayfair in late 2018 now requires small businesses to collect and remit sales tax. States are increasingly implementing this decision; and, for businesses with fewer resources, this can create workload issues.

We have been scrambling to set up SaaS platforms to automate this process for many of our clients, said George Birrell, CPA and co-founder of Taxhub. "The alternative of calculating and filing sales tax returns in 50 different states on their own is just not feasible for most SMBs. This is a very large shift in the tax compliance world."

[Read: A Complete Guide to Filing Your Business Taxes]

Talk to your CPA or tax professional

With all the new changes and laws being enacted, it can be hard to keep track of everything. Talking to a certified public accountant (CPA) can give you clarity on these changes and how to prepare for tax season.

While it's important to keep accurate, thorough records of your income and expenses throughout the year, small business owners sometimes struggle to stay organized and on top of things. Scholl recommends meeting with a tax professional sooner rather than later, even if your accounting records aren't in perfect shape.

Scholl also suggests asking your CPA about different tax scenarios.

Have your tax professional give you “what if “scenarios if you contribute to a retirement plan for yourself and employees – because you can extend your return and have up to September 15 or October 15 to fund the contribution, and still take the deduction on your 2019 tax return, he said.

Finally, be sure to keep looking ahead and thinking about how your 2020 business plans will impact next tax season.

"While you're working on your 2019 tax return, drive your business to success by looking forward though the windshield at what's ahead for tax planning and profit opportunities," said Scholl. "The best benefits and tax breaks generally require planning ahead."

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published February 13, 2020