If you're a small business owner, you'll know the value of every dollar saved, right? Did you know you can save a ton of money by taking advantage of tax credits?
According to the Small Business Administration stats, small businesses in the US save a yearly average of $7,000 by claiming tax credits. That's a lot of money! But here's the catch- maximizing the value of credits isn't always easy.
The sheer number of options can be confusing, and you may miss out on them due to a lack of awareness. Lucky for you, we've got a list of tips to help you get the most bang for your buck. Here you go!
Seek help from experts
Navigating the world of tax credits can be challenging. As a small business owner, you may not have enough knowledge and experience with the laws and regulations. Trying to handle them on your own is the worst mistake.
Let experts like accountants and tax attorneys handle your deadlines, records, deductions, and credits. Lucky for you, it's possible to outsource these services instead of bringing experts on board.
Maintain accurate records
Accurate and complete records take you a long way with tax planning. Many credits will require you to provide documentation and proof of eligibility. So you must maintain accurate records of your business activities throughout the year to save the hassle in the end.
For example, if you're looking to claim the Research and Development Tax Credit, keep the records of your research activities and expenses in place.
Keep track of eligibility criteria
While there are dozens of tax credits small businesses may seek, not all of them apply to every organization. You'll have to meet some eligibility criteria to qualify for them. For example, to claim ERC 2021, you'll have to show a minimum decline of 20% in your gross receipts compared to the same quarter in 2019.
Knowing the eligibility criteria is essential to make the most of these valuable opportunities. So brush up and get going!
Plan ahead
Many tax credits may require you to take certain measures or make specific investments to qualify. For example, to get the Small Business Health Care Tax Credit, you will have to provide health insurance coverage to your employees. Additionally, you need to meet some criteria related to the coverage cost.
Also, check the deadlines and submit your application early. So plan ahead and ensure you're taking the necessary steps to qualify. Consider it a small effort to make big money.
Stay up-to-date on changes
Tax laws and regulations are constantly evolving. So you must stay up-to-date on these changes to maximize the value of your credits. The laws related to ERC changed more than once during the pandemic, and many businesses missed out on valuable credits due to a sheer lack of awareness.
You can trust your experts on this one. Subscribing to newsletters or alerts from government agencies also makes sense.
Are you worried about missing out on tax credits? Well, you should, because these cuts can significantly lower your bills. So how should you ensure getting the most for your small business? Follow these tips and you're good to go!