As Labor Day recedes into our collective memory, and the warm glow of summer fades away, the collective New Jersey business community is faced with the following reality.
The current administration in Washington appears to have focused on comprehensive tax reform as a pillar for reform, and with Congress returning from recess, there is a real possibility this plan will become reality. Although many people from the NJ/NY area commute on Amtrak/Acela to Washington on an ongoing basis, the implications for small business may be overlooked in the hustle and bustle of everyday life. Regardless of whether or not the current political environment is perceived as favorable, or what other issues are continually ongoing, the reality of the situation is that tax reform is a real possibility.
Washington machinations are more than just fodder for Happy Hour conversation – these are issues and topics that can have a definite impact on your bottom line. As a CPA who lives in, has worked in, and who has advised entrepreneurs in New Jersey, but now works in New York, this is an issue I hear about and think about on a daily basis.
Especially in the current political environment, it may be easier than ever before to lose track of the nuts and bolts of tax reform amidst the numerous other issues in the media. That said, looking at these potential reforms from an objective perspective is important from a planning perspective for both the near and long term. Taxes, and the implications that taxes have on how businesses are managed, are not hypothetical issues that are only debated in the media – these are issues and ideas that can mean the difference between profit and loss. While it is important to note and understand that there is currently no tax legislation making its way through Congress, the potential for tax reform remains a tangible force in the marketplace.
There are implications that are associated with tax reform that can, potentially, impact business and entrepreneurship across the United States, but let’s take a look at some of the implications that may be of interest to New Jersey entrepreneurs and small business owners.
With thousands of Jerseyans commuting and working either in New York City or Philadelphia on an everyday basis, this proposed elimination is something that could have a very real impact on New Jersey business. With so many entrepreneurs, individuals, and aspiring small business owners working across state lines, and regardless of whether the business is in North or South Jersey, this is something every small business owners needs to be aware of.
Even as a CPA with years of experience navigating different forms of paperwork, it requires patience and time invested to consistently and accurately interpret what exactly this means for different business owners. A reduction in complexity of the tax code, whether it be at the individual or corporate level, represents a step forward for business owners in an increasingly competitive landscape. Cutting down on paperwork, and reducing the amount of time invested in preparing paperwork, will ultimately add value to the business. Although the IRS budget continues to operate under budget cuts instituted in previous years, there appears to be an emphasis on reducing complexity and the burden on small businesses as it pertains to filing taxes. New Jersey entrepreneurs and aspiring small business owners have enough to deal with – taxes should be an area where reducing the complexity is a slam dunk.
If you and I are at all alike, we are juggling numerous different items at nearly every hour of every day – this only becomes more important when the focus is on small business and entrepreneurship. Filing taxes, inputting information, and analyzing said information in an online and technological savvy format is one such tactic, but it is important to realize that technology can play a much bigger role in small business management. If you can make sales, attract clients, and pay bills using online tools, why shouldn’t you be able to handle taxes in the same manner? There have been some moves toward modernizing the tax filing and reporting systems, and improvements in this area will only benefit business owners and managers operating in New Jersey.
The D.C. political scene might be something that you are very interested in, that you are not at all interested in, or something that you try to ignore, but the reality is that the implications of D.C. activity in the nation's capital are not something you can ignore. Taxes play a large role in business operations, in making decisions related to your business, and in whether or not your business operates at a profit or loss. Especially in NJ, where so many individuals work and operate businesses across state lines, these are items and issues that we should all be up to speed on as we enter the fall season.
Dr. Sean Stein Smith, DBA, CPA, CMA, CGMA, CFE is an Assistant Professor at Lehman College (CUNY). Sean is a member of the NJCPA Content Advisory Board, Emerging Leaders Council, and a weekly columnist for Inc.com. He is a member of the Fairleigh Dickinson University Board of Governors, is a member of the AICPA 2017 Leadership Academy, and has been named 40 under 40 in the accounting profession by CPA Practice Advisor. Additionally, as a member of the AICPA National Commission on Financial Literacy, he has been frequently quoted and featured as a personal finance expert. He can be reached at drseansteinsmith@gmail and on Twitter at @seansteinsmith.