top of page

Small Business and Taxes

Updated: Apr 18, 2023


As a small business owner, it's important to be aware of the various tax credits available to you. Tax credits are a way for the government to incentivize certain behaviors or investments, and they can be a valuable way to reduce your overall tax liability. Here are some of the tax credits you may be eligible for as a small business owner:


  • Small Business Health Care Tax Credit: If you provide health insurance to your employees, you may be eligible for the Small Business Health Care Tax Credit. To qualify, you must have fewer than 25 full-time equivalent employees, and the average annual wage of your employees must be less than $55,000. The credit can be worth up to 50% of the premiums you pay for employee health insurance.


  • Work Opportunity Tax Credit: The Work Opportunity Tax Credit is available to businesses that hire individuals from certain targeted groups, such as veterans, ex-felons, and individuals receiving government assistance. The credit can be worth up to $9,600 per employee hired.


  • Research and Development Tax Credit: If your business invests in research and development activities, you may be eligible for the Research and Development Tax Credit. The credit is designed to encourage businesses to invest in research and development activities that lead to new or improved products, processes, or software. The credit can be worth up to 20% of the qualified research expenses.


  • Disabled Access Credit: If you make your business more accessible to individuals with disabilities, you may be eligible for the Disabled Access Credit. This credit is designed to help businesses comply with the Americans with Disabilities Act (ADA) by providing a tax credit of up to $5,000 per year for eligible expenses.


  • Energy-Efficient Commercial Buildings Tax Deduction: If you own a commercial building and make energy-efficient improvements, you may be eligible for a tax deduction of up to $1.80 per square foot. The improvements must meet certain energy-saving standards set by the government.


  • Employee Retention Credit: The Employee Retention Credit was introduced in response to the COVID-19 pandemic and is designed to help businesses retain employees during periods of economic hardship. The credit can be worth up to $7,000 per employee per quarter and is available to businesses that experience a significant decline in revenue.


  • Purchasing a vehicle that weighs over 6,000 pounds can provide a tax advantage for certain taxpayers. This is because vehicles that weigh over 6,000 pounds are classified as "heavy vehicles" by the IRS, and may be eligible for a special tax deduction known as the Section 179 deduction. The Section 179 deduction allows businesses to deduct the full purchase price of qualifying equipment or software in the year it was purchased, rather than depreciating it over time. This deduction can be a significant tax benefit for businesses that purchase expensive equipment or vehicles. A business that purchases a heavy SUV for $60,000 can immediately deduct up to $25,000 of the cost of the vehicle under the Section 179 deduction. The remaining $35,000 can be depreciated over the useful life of the vehicle, and since the vehicle is considered a heavy vehicle, the business can deduct up to 80% of the cost, or $28,000, over the five-year useful life of the vehicle. This means the business can deduct a total of $53,000 ($25,000 under the Section 179 deduction and $28,000 in depreciation) over the life of the vehicle. It is important to note that the tax rules for business vehicles can be complex and depend on the specific circumstances of each business. It's always a good idea to consult with a tax professional to ensure that you're taking advantage of all available tax deductions and credits.

These are just a few of the tax credits available to small businesses. It's important to note that tax laws and regulations are subject to change, so it's always a good idea to consult with a tax professional to ensure you're taking advantage of all available tax credits and deductions for your business. By staying informed and taking advantage of tax credits, you can reduce your overall tax liability and keep more money in your pocket.


Filing Extensions



To file a tax extension for just $1.00, follow these steps:

  1. Go to irs.gov/payments and select "Quick Pay Now with Direct Pay."

  2. Choose "Make a Payment" and select the option for an extension. The remaining fields will auto-fill, so select "Continue."

  3. Verify your identity using the information on your tax return. Make sure that the address you enter matches the address on your tax return.

  4. If you only want to file for an extension, enter $1.00 in the payment field. However, if you plan to owe taxes when you eventually file, enter the maximum amount you can pay.

  5. Enter your banking information, and your extension will be officially filed.

Comments


bottom of page