Davis Senseman, founder of Davis Law Office in Minneapolis, MN
"The new tax law is so confusing that tax accountants and lawyers are the only ones who are going to grow their business and hire more employees as a result of it. Even then, there’s so much uncertainty in the law that it’s really hard to find an accountant who can give you a simple yes or no answer about whether you should restructure your small business into an S-corp or an LLC.
"Our law firm sits in a very privileged position when it comes to this tax law because we are attorneys who advise small businesses. We decided to restructure our business, and we had to spend a great deal of money to figure out the details with our accountant. That means that, in the first year at least, what we will save in taxes will be pretty much outweighed by what we spent to figure it out, and again, we are in such a unique position. I would double what we spent for any other small businesses because they will need to talk to their attorneys as well.
"I have been talking about the uncertainty of this tax bill a lot with my clients who are small business owners. The median income for a self-employed individual with an incorporated business in Minnesota was about $48,241 in 2015. For the vast majority of small businesses, that means that it does not make financial sense to spend thousands of dollars on accountants, attorneys, and other fees in order to restructure their business. In my experience, these business owners are more concerned about the dire need for investment in infrastructure, schools, and our healthcare system than they are about potential nominal decreases in their tax rates anyways.
"Uncertainty is never your friend when running a business, and there are so many things about this bill that are uncertain. We simply don’t know how much of it is going to be interpreted. Just wait until next April, when people are trying to guess what they should be doing."
Davis Senseman is the founder of Davis Law Office in Minneapolis, MN, a full-service law firm for small and medium sized businesses. Davis Law Office employs five people and has a roster of over 800 Minnesota-based small business clients. Davis is a member of Main Street Alliance of Minnesota, a statewide network of small business owners.