Big Changes in 2018: Is Your Franchise Prepared? Shifting regulations affect SBA funding, rollover start-up plans.

Author:Kerley, Dallas
 
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In recent months, the federal government has made significant changes that will have a big impact on businesses in 2018. These are key revisions that will affect both funding and tax reporting for franchises.

SBA FUNDING

The U.S. Small Business Administration has ruled that, effective Jan. 1, 2018, franchises that aren't in compliance with its new Franchise Directory requirements will be unable to offer SBA funding to franchise candidates.

Each franchise that wants its candidates to be able to finance through the agency must be listed in this directory, which will be run entirely by the agency. The SBA Directory is not to be confused with the Franchise Registry, which is managed by FRANdata.

While FRANdata's registry will still provide lenders with valuable information they may need when reviewing a franchise concept, being listed in the SBA Directory will be a prerequisite for a franchise brand to qualify for SBA financing. If a brand is not on the list (sba.gov/document/support-object-object-sba-franchise-directory), candidates currently in the pipeline will experience delays in closing. If your brand is not yet on the list, go to the link above and follow the instructions.

TAX REFORM

We have been very watchful of the tax reform effort that has been debated fiercely in Washington, D.C. and was signed into law Dec. 22. With the help of our tax partners, below are some of the highlights regarding the reform's effect on the Rollovers as Business Startups plan:

  1. The graduated corporate tax bracket is no longer in effect. C corporations will now be taxed at a flat rate of 21 percent on taxable income. This eliminates situations where C corporations were taxed at rates as high as 39 percent on taxable income.

  2. With the flattening of the...

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