After the new tax reform bill became law in December 2017, individuals and business owners everywhere are scrambling to find out how the major changes from this bill will affect them moving forward. For small business owners, there are likely to be some moderate to significant benefits in the form of lower taxes, which are meant to encourage them to invest in growth and expansion in hiring and wages.

The bill, however, is fairly complex, so it may be beneficial to speak to a tax professional to help ensure you understand the changes and know how to take most advantage of them. However, we’ll explain some of the specific provisions in the bill here so you can get a sense of how it may affect you and your business.

Pass-Through Companies

The tax bill, as it was finally passed, essentially permits most pass-through companies deductions from their taxes of of up to 20 percent of the income of that year. “Pass-through” refers to businesses where the income of the business passes through directly to the owners, so that the government taxes the owner for the income of the business instead of forcing that owner to pay taxes twice: once for their business and once for their own personal income.

Pass-through companies include partnerships, limited-liability corporations and partnerships and make up 95 percent of businesses in the United States. For the overwhelming majority of small business owners, and indeed most business owners in the United States, that means 20 percent of your income is now deductible and will be free from taxes.

Individual income tax brackets have also been adjusted, which may provide extra benefits for small business owners whose incomes are taxed in this way. However, certain types of businesses are subject to somewhat different sets of rules.

Effects on Other Types of Companies

For companies that depend extensively on their employees, like restaurants, distribution or manufacturing-based businesses, the deduction of 20 percent is limited according to your total payroll. The 20 percent is limited to only half of the payroll. For most small businesses, however, that limit won’t be a problem.

Service-based companies that make more than a certain amount, however, will not be eligible for the same tax break. This mostly disqualifies smaller accounting firms and law practices. The justification is that the tax break is meant to target businesses that create jobs, and firms of this sort aren’t likely to create more jobs with this tax break.

To be specific, the tax deduction is accessible to single taxpayers who have incomes of $157,000 or less or married couples who file together and have incomes of $315,000 or less. A tax professional can help you be sure about which benefits you and your business qualify for.

Other Deductions and Changes

Those are the biggest, most significant changes to the tax law that will affect your business, but there are other new tax opportunities for you to take advantage of as well. One new possible deduction is for new equipment expenses and other property purchases you’ve made for your business.

If you’re acquiring a piece of equipment for the first time, you’ll be eligible for a deduction on that property that same year. You’ll qualify for a deduction if you’re buying a used machine, and if it’s new you can deduct the full cost of the investment you made in that equipment, which means it’s easier than ever to invest in new technology for your business.

One deduction that is no longer available for business owners is that for entertainment expenses. You can still deduct half of expenses used for meals involved in conducting business, but the outings that are primarily entertainment-based are no longer eligible for that deduction.

The new bill also brings a few new changes governing businesses that operate internationally, which, while not relevant to most small businesses, is still something to watch out for. The government is offering a one-time lower tax rate for companies that have been sheltering untaxed profits overseas without reporting it. Once they pay it, it will also allow them to no longer pay U.S. taxes on that income made overseas moving forward.

Changing Your Business Structure

Because so many of the tax law changes depend specifically on the way your business is structured, many business owners have found themselves wondering if they should change the way their business is structured to take advantage of different tax rates and deductions.

However, making a decision as big as changing the way your business is structured can have many consequences beyond just the exact tax rate you fall under, and is not a decision to be taken lightly. Make time to meet with your accountant or tax professional and carefully discuss the changes and your options before making any decisions.

Regardless of the exact type of business you own, the new bill should bring you some benefits. It’s time to learn how to take advantage of them and use the opportunity to invest, grow and compete.