As a small business owner you’re always looking for ways to make every cent count. You’ve got a low overhead but come tax day, you’re always paying a big sum to the IRS. All of this can get aggravating because you know you can better invest that money into growing your enterprise than the government possibly can. Fortunately, there are a number of steps entrepreneurs can take to reduce their tax bills over the course of the year. Keep these tips in mind when talking to your accountant or filling out the forms yourself as the tax deadline approaches. They could save you a pretty penny.
1. Hire unemployed military veterans
Some people have difficulty either returning to civilian life or finding a company that will allow them to get back on their feet. Enterprises that hire unemployed veterans, food stamp recipients or supplementary security income are eligible to receive a Work Opportunity Tax Credit from the federal government, according to the U.S. Department of Labor. Businesses may also receive the tax credit if they extend a position to an ex-felon, people receiving certain types of government assistance or a summer job to disadvantaged teenagers. This credit is good for the year you hire the person.
2. Take advantage of Section 179
Did you buy a lot of new equipment for your small business during the past year? If so, don’t wait five to 10 years to deduct the expense. Under Section 179 of the tax code, a business can deduct up to $500,000 on eligible tangible items such as physical computer software, buildings or machinery that the company uses over 50 percent of the time for its business.
In order to deduct the cost of buildings from your taxes, you must use the facility for business or research.
3. Health care credit
If you own a small business with fewer than 10 full-time staff members and you provide health insurance to them, then use IRS form 8941 to claim your health care tax credit. This savings is especially helpful for companies where the average employee makes less than $50,000 a year.