There’s Never Been a Better Time to Find Tax Credits for Your Small Business
Tax credits are powerful tools for small business owners. And in today’s economy, everyone needs to use those tools to reduce their tax burden as much as possible. The following information will help you understand and find any money you may be leaving on the table.
What Are Tax Credits?
Tax credits reduce your tax bill dollar for dollar. For example, if your small business owes $20,000 in taxes, a $9,600 tax credit means you can subtract $9,600 from your tax bill. Tax credits differ from deductions in that deductions decrease your taxable income, putting you in a lower tax bracket if you report your business income on your personal income tax return.
Most states and the federal government offer tax credits to encourage economic growth. These tools are designed to attract and retain businesses. They also help companies to save money on federal and state income tax returns.
Are Tax Credits Available for Small Businesses?
Yes, they are available for businesses of all sizes. Large corporations generally employ a team of CPAs and attorneys who ensure they take advantage of all available tax credits. Unfortunately, small companies do not usually have that luxury. As a matter of fact, many small business owners we meet do not know what credits apply to their businesses, and some have never heard of them.
According to leading industry sources, less than 20% of companies take advantage of all available state and federal tax credits. Why? The government does not actively market most tax credits and incentive programs to the majority of businesses. In addition, the compliance, documentation requirements, and expertise needed to capture tax credits prevents most small business owners from moving forward.
Most Common Types of Credits
Several different types of credits are available, depending on the industry, location, business practices, and employees. The most commonly used tax credits available in Georgia are the Work Opportunity Tax Credits (WOTC), the Retraining Tax Credit (RTC), and Location Based Tax Credits. Research & Development and other credits are also available.
First, let’s take a closer look at WOTC, RTC, and Location Based Tax Credits. Then, in the next article, we discuss credits for R&D and others.
How Do I Get Credits for My Business?
There are state and federal resources available online for business owners who want to research and apply for credits and incentives. However, small business owners who want to apply for credits in-house often find the process confusing and overwhelming. The legal and compliance aspects can even be a little frightening. We offer a better way.
SmartPayroll Solutions – HCM, partnered with a team of expert consultants, helps business owners pursue comprehensive state and federal tax credits, making sure no money is left on the table. If you are ready to save on your income taxes, learn more here or contact us today and schedule your free consultation!