In case you missed it, Mr. President just signed a highly debated tax bill into law.
If you're anything like I am, you've been wondering what that means for your side hustle, full-time hustle, or even hustle-to-be. I have to admit, the rumblings about the rich getting richer while the poor get poorer made me sick to my stomach. It felt like this might be just another systematic hurdle to get over, not only for myself but for my people – for my culture.
As a recent grad, entrepreneur, and employee, I had a lot of questions. Would this new plan make it nearly impossible for me to launch my own business? Would my salary be affected? Would there be hidden factor and loopholes that might stand in the way of me achieving my goals? Would I even be affected?!
The answer is yes – we all will be affected by this new law – one way or another. Depressing, right? Wrong!
We may not be able to stop this plan anymore, but we can certainly outsmart it. With all the controversy and opinion surrounding the new tax plan, it's that crucial our generation of lady bosses understand the pros and cons of the plan, and begin to take actionable next steps so we can live our best life. Below you'll find 5 things to keep in mind about how the tax bill will affect your grind, and what you can do to deal with it.
No one said being a hustler was easy, but it's time to boss up.
It's no secret – this tax plan favors big businesses over "the little guy." While I'd hoped this was all hearsay, unfortunately there's a lot of truth behind it.
This new bill declares that businesses get permanent tax cuts while individuals benefit temporarily until 2025. The bill has also permanently cut corporate taxes from 35% to 21%, which means that all my freelance divas might run into some issues next tax season. No matter what tax bracket you fall under, it might be more financially sound for all you freelancers and early startup founders to think of yourself as well: You, Inc©. Instead of claiming your freelance dollars under your personal name, start restructuring, and think about considering your own income your businesses income.
Okay, not-so-good news. The nonprofit industry is getting hit, and getting hit hard.
According to this new law, taking the standard deduction won't allow for you to deduct charitable donations. This means that donations to your favorite charities, and potentially your business, are no longer tax deductible. I'm still grappling with this one as it's certainly one of the hardest pills to swallow when thinking about the effects on our communities and hustles. This will hurt both for-profit businesses committed to giving back, as well as non-profits who rely on the generosity of individuals and like-minded companies. In turn, non-profits will be forced to think about restructuring… sound familiar?
Where my S corp ladies at? Hey. Now that I have your attention, it might be time for you to consider restructuring (word of the day) to become a C corp.
You see, S corps and LLCs fall under what is considered a pass-through income. That means that you get taxed under your personal rate as opposed to your business income. In this new system, all the tax reasons you chose to become an S corp in the first place (ahem tax breaks) may no longer exist. Since this plan gives big businesses (C corps) a significant deduction over individual and pass-through income, it might be time to think about switching your game plan.
Healthcare has to be part of the conversation when we talk about our businesses. The reality is, whether we are the employee, or the employer, healthcare plays a huge role in who we work with and how long we work with them.
Being at a job with lacking healthcare is stressful, while on the other side, shelling out cash for your employee healthcare hits CEO and Founder wallets hard – especially in the early startup phases. This new bill reverses the health insurance mandate, meaning that every American is not required by law to have health insurance that meets the minimum standards starting in 2019. It's expected that almost 13 million American will lose healthcare due to an increase in pricing under this provision. Having a conversation about the importance of being insured is essential, so make sure to make it known where you stand when it comes to your health insurance.
As much as I hate to say this, this new tax plan will set a lot of people forward before setting them back. That's what's so tricky and absolutely crucial to understand.
Most Americans will actually see tax breaks between the 2017 and 2025 when temporary breaks expire. That's why we have to starting thinking now about our end game; how to restructure our lives so we can move forward without unwanted surprises when everything is said and done. If you're a hustler, knowing how to navigate this bill – both professionally and personally will be everything. Over the next 7 years, make sure to keep track of your individual bracket and if you have the resources, consult with the professionals. When you can, use the preference of business to benefit not only yourself, but your community and your employees. If we keep up with it, this thing won't stand a chance at beating us.
P.S. You can read the FULL healthcare bill right here… All 505 pages of it.
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