Page 37 - 2018 Landstar The Road to Success® Magazine
P. 37

GROWING YOUR BUSINESS
IS INCORPORATION RIGHT
Most owner-operators (O/Os) begin their business as a sole proprietorship. However, as your business grows, there can be bene ts from changing your business structure.
WHAT TYPE OF BUSINESS STRUCTURE SHOULD YOU CONSIDER?
FOR YOUR BUSINESS?
BY SEAN BRYANT, ATBS
LLC and S corp). Under TCJA, a pass-through entity can now deduct 20% of your Quali ed Business Income (QBI), meaning you will only be taxed on 80% of your pass-through income.
There are many other areas where TCJA impacts owner-operators. For example, it nearly doubles the standard deduction, there is new bonus depreciation, tax rates are lowered, A ordable Care Act penalties go away in 2019, etc. Good news
is that even though the per diem deduction was eliminated for company drivers, it remains an eligible deduction for O/Os. At atbs.com you can download our free eBook on how TCJA will impact O/Os.
ATBS simulations show that under TCJA, the average O/O could see a tax savings of $2,000
or more in 2018. And for O/Os making $60,000
or more in net income, the tax savings could be signi cantly greater by electing to  le as an S corp. For example, an O/O making $60,000 net income and  ling as a sole proprietor in 2017 could see a tax savings of over $4,700 by  ling as an S corp
in 2018.
It’s important to recognize that every individual’s
tax situation is di erent, and thus it’s crucial to consult a tax advisor that specializes in trucking and owner-operators to ensure you are taking advantage of every new tax savings opportunity a orded in the Tax Cuts and Jobs Act of 2017.
Sean Bryant works at ATBS, the largest accounting, bookkeeping, and tax company for professional truck drivers. ATBS is an independent company not a liated with Landstar. The views expressed here are of ATBS and not Landstar. BCOs are recommended to seek independent tax advice.
A good option for many O/Os is a Single-Member Limited Liability Company (LLC). Like a corporation, an LLC can provide personal legal protection from liabilities and judgments against the business. And one of the best things about an LLC is the  exibility it o ers in regard to taxes.
An LLC has the option to be taxed as either a sole proprietorship or an S corporation (S corp). Like a sole proprietorship, an S corp is considered a pass- through entity with pro ts distributed to the owner(s) and taxed at the individual level. By  ling as an
S corp, and paying yourself a reasonable salary, each owner of an LLC will be responsible for paying income taxes, but you avoid self-employment taxes. This can be a substantial savings versus a sole proprietorship.
Working with thousands of O/O clients, ATBS has generally found that O/Os with a net income of $60,000 or more can often see signi cant tax savings by  ling their taxes as an S corp.
HOW DOES THE TAX CUTS AND JOBS ACT OF 2017 (TCJA) IMPACT PASS-THROUGH ENTITIES?
TCJA is the largest tax reform since the 1980’s, and one of the biggest changes a ects pass- through entities (sole proprietorship, partnership,
www.landstar.com
2018 Issue 1 | The Road to Success
• 37


































































































   35   36   37   38   39