Running a small business means juggling countless responsibilities, and tax planning often falls to the bottom of the list. Yet, there are numerous tax credits for small businesses designed to ease your financial burden—many of which go unnoticed. Here are 10 commonly overlooked tax credits that could save your business thousands.
1. Work Opportunity Tax Credit (WOTC)
Hiring individuals from targeted groups—such as veterans or long-term unemployed—can earn you a credit of up to $9,600 per employee. This credit rewards businesses for expanding opportunities and diversifying their workforce.
2. Tax Credit Analysis Uncovers Hidden Savings
If your business develops new products, processes, or software, you may qualify for this credit. Even small improvements can count, making this a powerful incentive for innovation.
3. Payroll Tax Credit for R&D
Startups and small businesses can apply up to $250,000 of R&D credits against payroll taxes. This is especially helpful for companies not yet profitable but investing heavily in development.
4. Disabled Access Credit
Businesses with 30 or fewer employees or under $1 million in revenue can claim up to $5,000 annually for making facilities accessible to individuals with disabilities.
5. Employer-Provided Childcare Credit
Offering childcare services or facilities can earn credits for setup and operational costs. This not only supports employees but also strengthens retention.
6. Small Employer Pension Plan Startup Credit
Starting a retirement plan like a SEP or SIMPLE IRA? You may qualify for up to $5,000 in credits to offset administrative costs.
7. Small Employer Health Insurance Premium Credit
Businesses with fewer than 25 employees and average wages below a set threshold can claim credits for contributing to employee health insurance premiums.
8. Family and Medical Leave Credit
If you provide paid family or medical leave, you could receive a credit based on a percentage of wages paid during leave periods.
9. Energy and Clean Vehicle Credits
Investing in energy-efficient equipment or clean vehicles can unlock credits under federal energy programs—plus potential state incentives.
10. Opportunity Zone and New Markets Credits
Investing in designated low-income communities can yield significant tax benefits while supporting economic development.
Why These Credits Are Missed
- Complex rules: Each credit has unique eligibility requirements.
- Lack of awareness: Many small businesses don’t know these credits exist.
- Documentation hurdles: Proper record-keeping is essential to claim them.
How to Maximize Your Savings
- Plan early: Identify credits before year-end.
- Keep detailed records: Track expenses and eligibility documentation.
- Consult a tax professional: Expert guidance ensures compliance and maximizes benefits.
These credits can significantly reduce your tax liability and free up resources for growth.
Want to Know More?
To understand the difference between a Tax Credit versus a Tax Deduction, read our blog outlining the each.
Working with a professional is a good investment and can save you money in the long run. Inquire about our tax credit analysis and let’s start saving your business money.
For more information, contact us online, via email or phone.
