Security Business

JUN 2018

Find news and information for the executive corporate security director, CSO, facility manager and assets protection manager on issues of policy, products, incidents, risk management, threat assessments and preparedness.

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June 2018 / Security Dealer & Integrator 41 Electrical Security Datacom Telecom Residential 805.384.2777 We Make Connections EZ! ª New! HPH J-Hooks High Performance Hybrid • Steel with polypropylene over-mold for easy cable slide • New Snap Lock Retainer firmly secures cables • Sizes 1" to 4" HPH16 (1") HPH32 (2") HPH48 (3") HPH64 (4") • Standard, 90 degree Angled, Batwing • cULus Listed • RoHS & TIA Compliant • Plenum Rated Cable Management for Modern Installs See us at InfoComm 2018 booth #C3445 See us at InfoComm 2018 booth #C3445 Cut Strip Terminate Test Request information: An LLC, on the other hand, is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. As is the case with security dealer or integrator own- ers in partnerships or sole proprietor- ships, LLC "members" report busi- ness profits or losses on their personal income tax returns – the LLC itself is not a separate taxable entity. TCJA Changes the Landscape As mentioned, the tax rate for regu- lar, incorporated businesses has been lowered from 35 percent to 21 percent; and there is no more special tax rate for so-called "Personal Service Corpo- rations (PSC)" – those unique entities dependent on the personal services of their owner. An unintended conse- quence of the lowered tax rate for regular corporations is that a majority of businesses cur- rently operating as pass-through business entities end up paying more in taxes by remaining a pass-through than they would by revoking the pass-through election or switching from pass- through to a C corporation. Another important factor in the pass-through entity vs. regular corporate form debate involves fringe benefits. Cur- rently, the vast majority of pass- through business owners can no longer deduct state and local income taxes and are permit- ted to write off only $10,000 of their property taxes. C corpora- tions face no similar deduction restrictions. A more than two-percent shareholder in an S corporation cannot participate in the oper- ation's fringe benefits. Health insurance, for example, is not deductible to an S corporation, but it is to C corporations. Of course, a security business owner is not forced to spend a lot of money on health insurance. ere are always Health Reimbursement Accounts (HRAs), allowing unlimited contribu- tions that, if unused, can be rolled over to the next year. It is a similar story with other fringe benefits with work- arounds available. e TCJA created a 20-percent deduction that applies to the first $315,000 of income (half that for sin- gle taxpayers) earned by businesses operating as S corporations, partner- ships, LLCs and sole proprietorships; however, the TCJA places limits on who can qualify for the pass-through deduction, with strong safeguards to ensure that so-called "wage income" does not receive the lower marginal tax rates for business income. All busi- nesses below the income thresholds – regardless of whether they are "ser- vice professionals" or not – can take advantage of the 20-percent deduc- tion. For income above the threshold, the new law also provides a deduction – although the 20-percent deduction from pass-through income applies only to business income that has been reduced by the amount of "reasonable compensation" paid the owner. Personal Service Corporations may be gone, however, the 20-per- cent deduction will not help every- one because of restrictions on "spec- ified service trades and businesses." So-called "service businesses" are not eligible for the deduction, and include businesses defined as those in the fields of consulting, as well as any trade or business where its principal asset is the reputation or skill of one or more of its employees.

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