As any entrepreneur knows, running a successful business is hard work. Heck, almost 1 in every 2 start-ups fail within half a decade! That’s why it’s essential to take advantage of any support you can get along the way One of the main benefits of hiring tax relief company for your business is that they can detect tax issues and provides favorable solutions to save your assets, tax liens and levies, and explain all about the IRS process.
Enter the various types of tax credits for small businesses.
Applying them against any taxes owed should put your company in a significantly better financial position at the end of the fiscal year. Want to find out which credits are available to you as you prepare for tax season?
Read on to discover 4 key small business tax credit examples.
1. Small Business Health Insurance Credit
You’ve got Obamacare to thank for this one! A highly popular tax credit, it’s available via form 8941 to any company that provides their employees with small-business health insurance.
There are conditions though. For instance, you’ll need to have less than 25 full-time employees and pay salaries under $55,000 per year on average. Likewise, you must be covering at least 50% of their health insurance premiums and have bought the plan from the small business health options program (SHOP).
2. Work Opportunity Credit
Do you hire employees from communities who are often underserved in the job market? Examples include veterans, ex-felons, the long-term unemployed, or those receiving supplemental security income.
If so, you could be eligible for the work opportunity credit. Accessed via form 5884, the extent of this credit varies depending on the specific category an employee falls into. More often than not, you’ll be able to claim 40% of the first $6,000 of their pay.
3. Disabled Access Credit
This credit applies to businesses that make their premises/locations accessible to disabled customers. Examples include building a ramp, putting enough space for wheelchairs between shelving units, and including text in braille. The advantages of doing so are two-fold:
First, any steps you take of this nature invite new customers into your business. And second, the credit provides an added financial incentive of up to 50% of whatever you pay for the disabled access. However, you can only claim it if your total revenues are $1 million or less and you have 30 or fewer full-time workers.
4. Employee Retention Credit (ERC)
Did you suspend operations because of a government order in the calendar years 2020/21? Or did you experience a significant drop in revenue during this time compared to 2019?
If so, the ERC is a form of COVID tax relief for small businesses. It could provide you with 50% of the wages (and health plan expenses) you paid employees for 2020 and 75% for 2021! Consulting an ERC Tax Credit FAQ page should help clarify whether or not you qualify for it.
Remember These Tax Credits for Small Businesses
Tax credits for small businesses offer an invaluable reprieve from the hefty tax bills they can face at the end of a fiscal year. Unfortunately, many entrepreneurs and owners fail to take advantage of them- often through a simple lack of awareness.
We hope the information in this post will help you avoid the same fate. Ready for more good news? You’ll find additional info on this important topic by searching “tax” on our website now.