Now that the new year is here, small business owners may find themselves trying to understand changes brought about by federal and state laws. Here are three things owners need to know for 2019:
— Tax filing season. Business owners will learn what impact the new tax law is having on their finances. Many owners who are sole proprietors, partners and shareholders in S corporations will be trying to figure out if they can claim the 20 percent deduction for qualified business income. The computations for the deduction can be complex, and depend on an owner’s income, and a spouse’s income as well, and how much they pay their employees. There are other big changes — for example, companies like manufacturers that can now use the cash accounting method instead of the previously required accrual method will be reconfiguring their ledgers.
Owners who didn’t do year-end tax planning may want to consider getting an extension of the filing deadline for their returns to give themselves breathing room. You can learn more about the new tax law and how to get an extension on the IRS website, www.irs.gov .
— Internet sales tax. The majority of states have enacted laws requiring retailers who sell in their states to collect sales tax even if they have no physical location like a store or distribution within the state. Most of the laws exempt retailers who have $100,000 or less in revenue and 200 or fewer transactions in a given state. Some of the laws are already in effect, while others go into effect during 2019. Some states have not acted yet.
Retailers can use software or services to help them collect tax, submit it to state tax authorities and compile required returns. The software is likely compatible with a retailer’s e-commerce system. Search online for more information,
— California’s Consumer Privacy Protection Act. The law, which potentially affects thousands of companies located outside of California, requires businesses to disclose what they do with consumers’ personal information and gives consumers more control over what happens to that data. Consumers have the right to have the information deleted from companies’ computer systems. The law takes effect Jan. 1, 2020, but companies must be in compliance with some of its provisions before the end of 2019. However, the law is expected to be amended because of several contradictions and other issues. You can search online for more information; some law firms have written primers to help explain the law.