How did Memorial Day affect your business this year? Did you run any sales or promotions for members of the military? Join a parade to advertise your business? Holidays are an excellent opportunity to connect with the community and get visibility.
And, if you missed doing that for Memorial Day, Independence Day is only a month or so away. Start thinking about some ways you can establish your business presence in the area and rake in some sales while honoring the red, white, and blue.
Capitalism is, after all, one of the things that makes the U.S.A. the U.S.A. Something also truly American, is paying taxes… which you know all too well as a business owner.
Something I haven’t reported on in a while that has to do with not paying as much taxes is the potential tax breaks for small businesses Congress is considering. I guess that’s because there’s not much new to report. Extensions of tax breaks and credits for parents and business owners are pending in the Senate. I’ll let you know further news on that as it develops.
In the meantime, I want you to know what IS available to you at this almost halfway point of the year. I’m talking about tax write-offs for small businesses that you could qualify for if you invest in them in the second half of 2024.
So I’ve got a list for you today to help you quickly see what investments could be advantageous for you in the next several months.
10 Tax Write-Offs for Your Small Business
“The important thing is to be moving.” – Roy Disney
Running a small business is all about maximizing profits and minimizing expenses. So let’s look at both of those goals from a tax standpoint today. I want to help you make smart decisions now to get ALL the tax write-offs for your small business investments.
1. Hire Smart
Expanding your team? Consider hiring veterans or long-term unemployed individuals — the Work Opportunity Tax Credit (WOTC) offers credits up to 9,600 per employee. You will have to provide appropriate documentation, and the credit varies with wage and work schedule. But this is essentially free money for building a diverse workforce. Win-win.
2. Stock Options If You Have That Option
The Small Business Startup Stock Option allows you to deduct up to 25 percent of the value of stock options you offer employees. This is a fantastic perk that incentivizes talent to join your company with a lower taxable income rate for them. Stocks have to be fair market value when offered, and you can only offer the options after a holding period. Note that because of the complex rules tied to this, you’ll want to consult with a tax professional during setup.
3. Upgrade and Save
The Section 179 Expense Deduction lets you deduct the full cost of new equipment or software (up to 1.22M in 2024) in the year you purchase it, rather than depreciating it over time. This tax write-off for small businesses is subject to change annually, but this is still an ideal way to modernize while lowering your tax burden.
4. Get Green
The Inflation Reduction Act of 2022 created or expanded business tax credits for electric vehicles, clean commercial equipment or fleets, and electricity from renewable sources. For example, the Solar Energy Investment Tax Credit (ITC) lets you deduct a substantial 30 percent of solar panel installation cost through 2032.
5. Research, Research, Research
The R&D Tax Credit rewards businesses for investing in, you guessed it, research and development. Companies of all sizes can claim a credit of up to 20 percent on qualified research expenses. But less than 30 percent of eligible small businesses claim this credit, so it could pay to find out about qualifying research expenses and how to document them.
6. Invest in the Community
Investing in businesses or real estate within a designated Opportunity Zone (economically distressed area) offers mutually-beneficial gains. For you, this includes potential capital gains tax deferral and even exclusion. But of course there are rules to follow in areas such as job creation.
7. Invest in your employees
Many states offer tax credits for employee training programs. From the Fed, you can earn employer tax credits for providing childcare, retirement plans, health insurance, and family or medical leave for your employees.
These are just a few examples; there are more. Consulting a business tax advisor can help you identify the perfect tax write-offs to maximize your small business’s savings. That’s a profitable phone call.
218-623-6050
Saving you money,
The TCG Accounting Team
