Small businesses need to save money in whichever possible way, and tax credits become one of those ways to save their expenses. However, there are small businesses that are not aware of these tax credit options. The ins and outs of the taxes for small businesses are impossible, and therefore, the businesses are not aware of the credits and deductions they can benefit from.
Therefore, in this article, we will discuss those commonly missed tax credits that small businesses can take advantage of in Billings. If you want to learn more about such tax credits and deductions, you can consult a tax accountant in Billings, MT, for better information.
What is the Difference Between Tax Credits and Tax Deductions?
There are instances in which the business owners focus on tax deductions and ignore the potential to claim credits. A tax deduction reduces your taxable income and puts you in a lower tax bracket. However, a tax credit reduces the amount of tax owed by giving a dollar-for-dollar reduction of your liability. For instance, a bill of $500 will be lowered by the $500 tax credit. A business can claim both benefits if they are qualified to do so.
What are Commonly Missed Tax Credits by Small Businesses?
- Work Opportunity Tax Credit (WOTC): It is claimed by the employees who hire individuals who are facing barriers to employment. So, in this case, you will get a tax credit for the dollars you have spent to provide them employment. Some of the essential examples are temporary assistance to needy families, ex-felons hired before one year of their conviction date, and other veterans. Small businesses can get credit for such activities.
- R&D Tax Credit: The R&D tax credit is to encourage companies to participate in R&D activities. Therefore, these tax credits are available for businesses of all sizes involved in research activities like software development, architectural design, and others.
- Natural Disaster Tax Relief: In the array of small businesses, tax relief in natural disaster situations is available to help individuals. The business is impacted by various natural disasters such as winter storms, hurricanes, tornadoes, flooding, seawater intrusion, wildfires, and other disasters that come under this tax relief. Once it is declared that your area was disaster-affected, you will get the benefits of an extension of tax fillings, payment deadlines, and additional tax relief.
So, these are certain tax credits that small businesses can avail of if they are aware of the intricacies of such benefits. However, you should consult an experienced accountant who can help you in saving your money and receiving such benefits.
