As a business owner, it’s important to understand your company’s local, state, and federal tax requirements to better manage your accounting and avoid costly penalties. Even when working with a tax professional, it is always a good idea to follow the tax laws that apply to your business. There are even state and federal tax credits and incentives that can be applied to your business that will save you money in the long run.
To help you throughout the tax season and year, up to 11 members of the Forbes Finance Board discuss the tax credits and tax breaks all business owners need to know. If you have not taken advantage of these credits and tax breaks, we recommend that you consult with a financial professional to determine if you qualify.
1. Loans for family and sick leave
The credit for paid family and sick leave was initially only valid for two years under the 2017 Job Reductions and Taxes Act, but Congress later extended the credit twice and is now under the Integrated Expenditures Act until 2025. It will do so. This is a total corporate loan that your employer may, under certain conditions, calculate based on the salary of a qualified employee. –Anil Grandi, FinTax AG
2. Secure legal credit
The SECURITY Act offers various tax credits to employers implementing the new compensation system. Loans help offset the costs of creating and maintaining a plan. For specific information about these loans, please see the legal requirements or contact an outside administrator who can develop a retirement plan that is suitable for your individual needs. -Ronald Stair, Creative Plan Designs, Ltd.
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3. Opportunity to get job tax credit
The Employment Opportunity Tax Credit allows employers to receive a deduction of up to $6,000 for each eligible new employee. WOTC encourages companies to hire staff from underserved people such as veterans, former seriously injured people, and food stamp recipients. The loan amounts to 25% of the eligible salary for the first year and is subject to minimum time limits and requirements. -David Kelly, email advocate
4. Energy Efficiency Tax Credit
Many tax breaks are not taken advantage of by employers and often spend a lot of money on them at unnecessary expense. An important area that many companies need to research is the area of energy efficiency tax credits. Companies that operate processes that are more energy efficient or “green” have strong tax incentives. All companies should consult an expert to determine their eligibility. – Julio Gonzalez, Engineered Tax Services Inc.
5. Tax credits for employee retention and disaster benefits
The employee retention tax credit (up to $7,000 per employee per quarter in 2021) and the IRSC 139 disaster tax credit are two pandemic-related deductions that many businesses currently qualify for. Whether your company’s sales are increasing or decreasing, you must manage the rising costs of masks, disinfectants and detergents to keep your team and customers safe. -Minal Babaria, KB tax advisor CPA
6. Employer health insurance, small premium loans
A very useful tax credit that every small business owner should know is small business health insurance. There are some very specific qualifications but these loans are very easy to qualify for. One drawback is that you can only apply for a loan for the second year in a row. There are many other loans that companies should consider such as: B. Loans for employee loyalty and R&D loans. – Patrick Rudd, Rood Financial Services
7. Research and Development Tax Credit
The R&D tax credit is a federal tax incentive to promote innovation, technology design, and manufacturing. Businesses can save thousands of dollars from the activities they have done if they understand the valuable tax incentives available. Check with your tax professional about your considerations and requirements as a large number of documents are required to qualify. -Jody Granden, Peak CPA Group
8. Civil servant training assistance
Employee training grants are often overlooked and are very similar to tax credits. Some countries finance training programs through certain wage taxes paid by companies. Despite mandatory reporting requirements, your company may receive state-recognized training reimbursement through grants. The scholarship process can be tricky, so be prepared. -Visibility Corporation, Dave Sackett
9. New Market Loans
New Market Credit, which you can apply for on Form 8874, will help you finance real estate investments in low-income communities. If you’re thinking of expanding into an accessible area, New Market Credit can help you pay some of your business’ operating costs. -Tyler Gallagher, Legal Property
10. Equipment depreciation
Since they are constantly changing, it is very important to have a good auditor to educate you about tax breaks. One of the most important tax credits is depreciation on equipment purchased for the company. Most business owners don’t take full advantage of this. – National Business Center, Yokanberato
11. Recommendations from tax professionals
The tax credit every business needs to know is the tax credit that has the biggest impact on its line of business. Ask a tax professional to find out what it is! Even if you write the book yourself, you still need to consult a tax professional to quickly find the information you want. For hundreds of dollars, an expert can ask as many questions as possible in an hour. Please do this. – Joseph Orseno, Tiltify