The newly signed One Big Beautiful Bill Act (OBBBA) is packed with tax changes that could reshape how small business owners like you handle bookkeeping and financial planning.
Here’s a breakdown of some of the most relevant impacts:
Key Bookkeeping Impacts for Small Businesses:
1. The 20% QBI Deduction was made Permanent:
This means that Pass-through entities (sole proprietorships, partnerships, S corps) can now permanently claim the 20% Qualified Business Income deduction.
→ Bookkeeping tip: Track owner compensation, distributions and fixed assets carefully to optimize this deduction.
2. 100% Bonus Depreciation was restored:
Businesses can fully expense qualifying assets (equipment, vehicles, etc.) in the year they’re placed in service after January 19th, 2025.
→ Bookkeeping tip: Track your fixed assets correctly in your accounting system.
3. Research and Development Expenses are Fully Deductible:
No more mandatory amortizations over five years. R&D costs can be deducted immediately. Besides, if you own an eligible small business that averages gross receipts of $31 million or less, you can retroactively apply this to 2022
→ Bookkeeping tip: If you qualify as an eligible small business, go back to your books and look for your capitalized R&D costs from 2022 and recover those deductions instead of amortizing them. From a prospective perspective, keep track of future R&D costs in your books.
4. Section 179’s has been increased:
The expensing limit goes up to $2.5 million and the phaseout threshold goes up to $4 million.
→ Bookkeeping tip: Track your fixed assets correctly in your accounting system.
5. New Deductions for Tip & Overtime:
Income Workers can deduct up to $25K in tips and $12.5K in overtime pay, subject to income thresholds through 2028.
→ Bookkeeping tip: Track these categories separately to support deduction claims. Update payroll systems and withholding procedures accordingly.
In sum, don’t slack and get your books prepared and ready! Why leave for tomorrow what you can do today?