Far too often, business owners do not take advantage of the many small business tax credit opportunities available and miss out on saving money come tax season. In this article, the professionals at Accounting & Tax Advisors CPAs explain what you need to know about tax credits and how to incorporate them into your business finances. Those requiring help with small business accounting services in Lombard, IL, should reach out to our team and request a consultation. Continue reading to learn more about tax credits and how they can help your small business.
Tax Credits vs. Tax Deductions
Tax credits and deductions lower your tax bill but work in different ways. Understanding how they work can help your business save money. The following explains the difference between deductions and credits:
· Tax Deduction: Lowers your taxable income
· Tax Credit: Lowers your tax bill
A business can include both deductions and credits, so speak to your tax advisor about which credits work for your company.
How To Claim Your Tax Credits
Each tax credit you claim requires its own form. If you claim multiple credits in a year for your business, you must fill out the IRS Form 3800. Form 3800 includes every possible credit your small business could claim.
If you only claim one small business tax credit, Form 3800 becomes unnecessary to fill out. Another note: Business owners have a limit to how many credits their business can claim in a year. Unused credits may roll over to the following year, depending on the specifics.
Types of Small Business Tax Credits
For optimal results, you must research and learn about every credit that could benefit you. Many small business tax credits go unused, even with eligible businesses. Your tax advisor should be capable of helping you understand your tax rights.
The following explains some commonly forgotten tax credits you might be eligible for:
· Credit for Small Business Health Insurance Premiums: Covers businesses that have less than 25 full-time employees, pay at least 50% of their employees’ health coverage, and provide less than a $55,000 salary per full-time employee. You can use it for two consecutive years.
· Work Opportunity Credit: Encourages businesses to hire underserved employees. The size of the credit depends on the qualified employee and their hours.
· Alternative Fuel Credits: Rewards companies that use or create alternative fuels, electric cars, and more. The amount varies drastically depending on the individual credit, your use, and more.
Request help from your tax advisor to ensure you claim all available credits for your employee’s qualified wages. You can also look into some opportunities for part-time employees, such as the Employee Retention Credit.
Conclusion Hiring an accountant for small business tax credits offers your best chance at claiming all possible credits for your company. Call our team for assistance and more information on your tax credits. Contact Accounting & Tax Advisors CPAs at (630) 932-9600 and request a consultation in Lombard, IL, to learn about your small business tax credit opportunities.