The one thing that all businesses must deal with is taxes. There is no question about their inevitability. Before a business owner looks to obtain funding it wise to make make sure that there is a comprehensive understanding of the tax credits available to take advantage of. Unlike tax deductions, most business owners are unaware of the various tax credits available to them. Having this understanding provides more insight which would hopefully lead to making well informed decisions on what type of funding to seek and how it would effect the overall bottom line. Each and every penny that a business can obtain via a tax credit is adding to that businesses bottom line. Below we will go over some of the tax credits currently available for businesses.
Employer Provided Child Care Tax Credit
If you’re a business that pays directly for the child care cost of your employees, you can qualify for this tax credit. The value of the credit amounts to twenty five percent of the childcare facility cost. A business can get up to $150,000 for each employee. Another advantage is that if the company is properly incorporated and the owner’s partner is also an employee, they too can qualify for this tax credit.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit is available for employees who hire people from certain target groups. These groups include Unemployed Veterans, Food Stamp Recipients, Ex-Felons, Qualified Long- Term Unemployment Recipients, Temporary Assistance for Needy Family Recipients, Summer Youth Employees, Vocational Rehabilitation Referred Individuals, Supplemental Security Income Recipients, and Designated Community Residents. A company will receive a credit that is about forty percent of the workers first year salary. This credit maxes out at $6000.00/$9600 for a disabled veteran hire.
Business Health Credit
If a company pays the health insurance premiums for it’s employees, it can qualify for a credit for up to fifty percent of that cost. This credit is available for eligible employers for two tax years that run consecutively. The health plans must qualify under the Small Business Health Options Program marketplace.
Research Tax Credit
A business can use qualified research expenses that are more than fifty percent of it’s average for the three prior years. This is a credit that goes up to twenty percent of a businesses expense for qualified research.
Qualified Research Expense Credit
This credit is meant to incentivize businesses to participate in research and development. It can provide a company with very tax large savings. The definition of the QREC is broad but involves a number of different activities. This can be developing new or improving old formulas, products, prototypes, models etc. Building or improving facilities, developing new technology, environmental testing, certification testing and more. QREC calculations can be complex.
Welfare To Work Expenses Credit
This credit is available to companies that hire employees who have historically face difficult barriers to employment. These barriers can include; lack of transportation or education, child-care needs, disabilities and more. The amount of the credit is based on the wages paid to the employees. This credit maxes out at $9,000 over a two-year period.
Disabled Access Credit
This particular tax credit is available to businesses that renovate its premises to make it more accommodating to people with disabilities. These renovations must meet the standard set forth by the Americans with Disabilities Act (ADA) A small business that qualifies for this credit must have gross revenue under a million dollars, and employ less than 30 full-time employees during the tax year. This credit is good for 50 percent of the initial $10,000 of eligible expenses associated with the renovation. The credit maxes out at $5,000.
In the end, it is a good idea to check into these credits and see how they may help your bottom line. In a perfect world it might serve as an alternative source of business funding that you were not even aware of. It’s money you have a right too. And it cost you nothing.