The Four Tax Credits Your Business Could Be Missing Out On
As much as it seems like a burden to the bottom line, paying your taxes on time and in full is an important responsibility your business has to shoulder. But as you cough up some of your income to the Internal Revenue Service, you may unknowingly overlook important tax credits your business qualifies for.
While it’s typical for the government to come after you for under-declaring your business income, you can bet it won’t give back money that should have been deducted from the corporate taxes you paid.
So, when paying corporate taxes to the IRS, you need to make sure you're calculating the right amount by keeping an eye out for these four tax credits:
1. Document expenses
Running a business requires managing a lot of paperwork. The good news is that the amount you pay to get documents printed can be deducted from your taxes. Acquiring or processing legal documents such as business plans and proposals is also tax-deductible. You might want to keep receipts for your document expenses and include the professional fees for attorneys or accountants tasked with preparing these documents. You will be surprised by how much you can save.
2. Cost of using vehicles
If you have a car you use to attend meetings with clients or transfer from one work location to another, your vehicle expenses are considered deductible. For this, you only need to measure the mileage the car has covered. There are apps that can help you measure your mileage so you have a better estimate of your deductibles. Take note that this is applicable only for business purposes, so personal travel should therefore be calculated as personal expenses.
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3. Research costs
Developing a new solution requires a lot of research and testing, which can drive up the cost of coming up with a new product. Luckily, you can offset these costs by using tax credits for research, especially if it is scientific. Under R&D credit rules, you can choose to deduct research costs immediately or amortize them. It is important to point out, however, that not all research activities are deductible. To be sure, you will need to refer to the IRS’s list of qualified research activities.
4. Miscellaneous fees
There are also other items you can write off. It’s this category that is the most neglected. You will have to be very detail-oriented in order to find these deductions, ranging from bank charges to payments in petty cash, from journal subscriptions to website maintenance expenses. It becomes manageable when you track your expenses closely using tools like tools like Hurdlr. The app can help you keep tabs on all your deductibles in real-time so you don’t have to waste time reviewing your expenses come tax season.
These are just some of the tax breaks you should look into if you want to save a lot of money. There are more than we’ve listed here, no doubt, so be sure that all your expenses are accounted for. You never know what routine expenses for your business can get you some money back on your tax return!