Tax Breaks For Small Businesses
If you own a small business, you may have heard of tax breaks for small businesses. These programs reward owners for their efforts to improve the local community while reducing their tax burden. These incentives help small business owners grow and remain stable for the long term. They can provide a portion of the taxes they pay or even accumulate tax credits. Here are some examples of tax breaks for small businesses and how they can benefit you. We hope this article has been helpful.
The tax credit for small businesses is equal to the amount of social security and Medicare taxes paid by employees. If the business does not pay the federal minimum wage, the credit is reduced. The federal minimum wage was $5.15 an hour on January 1, 2007. However, it is higher today, so it is important to use the minimum wage when calculating the credit for your company. Another tax break for small businesses is the credit for employee retirement benefits. This tax credit is available for businesses with less than 100 employees.
In addition to taxes on sales, business owners can also deduct their property and vehicle expenses. A business owner may need to repair property or perform routine maintenance. Sometimes they must travel to a meeting or transport heavy equipment. All of these expenses can be deducted from their income. Further, expenses for utilities, such as water, electricity, and internet, can be deducted from business profits. It may seem strange to write off these expenses, but they are still deductable when tax time comes.
Small businesses can also take advantage of the Health Insurance Tax Credit. Small businesses can claim this credit as much as 50% of the premiums paid by their employees. This credit is only good for two consecutive years after 2014, so businesses should act quickly. Unlike the old days, the credit can be carried forward. However, it is important to note that this tax break is not available if your employees are already covered by health insurance. Whether your employees need health insurance or not, you may be able to claim a tax break for these premiums.
Sec. 179 allows small businesses to take advantage of tax breaks on capital purchases. As long as the business is smaller than the threshold set by the Internal Revenue Service, small businesses can claim this deduction. The limitation for the deduction depends on the total amount of assets purchased. Those with less than $2 million in annual gross receipts can claim the full amount of up to $500,000 in capital purchases. This deduction also applies to new and used computers, vehicles, and furniture.
Another tax break for small businesses involves the Home Office Deduction. If you work in an office with a physical location, this deduction is a great way to save on taxes. Small businesses can use both methods and still save a lot of money. It also makes sense to review your tax structure and see which one is best for your company. You should also research the various deductions you can take for your small business. A tax professional can help you make the most of these tax breaks.