Small business owners have their fair share of risks and challenges and are entangled in a complex maze. They try to overcome all the initial challenges to establish a stronghold in the market. In this process, small business owners often miss out on valuable opportunities to reduce the tax burden, commonly known as tax credits.
This article will discuss what tax credits small business owners overlook. If you want more detailed information about such tax credits, you can consult an experienced accountant in New Rochelle. Various business tax preparation in New Rochelle, NY agencies help prepare all the tax details.
What are Tax Credits?
Tax credits are the tax incentive that refers to the money that taxpayers can subtract directly from the taxes they owe. Tax credits differ from tax deductions because tax credits reduce the tax due and taxable income. However, the tax deductions only deduct the taxable income.
What are Tax Credits That Small Business Owners Overlook?
- Research and Development Tax Credit: It is known as an R&D tax credit in which there will be credit for promoting innovations. It is designed to provide incentives for engaging in research and development activities. Small businesses often assume that this R&D tax credit is for large business giants, and it’s not their deal. However, this tax credit is available for various organizations involved in research and development.
- Work Opportunity Tax Credit: This tax credit is also available for small business owners but often goes unnoticed. It is given to various groups of members when hiring as an employee. It includes employment to veterans, recipients of government assistance, ex-felons, and other such groups. So, if small business tax owners employ these groups, they can get tax credits.
- Health Care Tax Credit: A health insurance facility is available to the employees. If small business owners provide such facilities to their employees, a tax credit will be available. In this case, the small business owner should pay the premium amount and meet certain criteria for a specific tax credit threshold.
So, these three are essential tax credits available for businesses to avail during their initial period. You can also consult an experienced accountant to know where to save the tax and how to maximize your profits.