Has your business ever considered applying for tax credits or incentives but wasn’t sure where to start? Understanding the available options, how to apply and eligibility requirements often appears so challenging that most businesses decide not to pursue them. But once you’re equipped with the right information on incentive availability and eligibility criteria, it becomes clear the effort to apply is generally very well worth it.
Here’s a breakdown of what you need to know about tax incentives before you apply.
Tax Incentive Options
Tax incentive opportunities range greatly depending on your state and industry. From having capital expenditures to future expansion and hiring plans, you may find your business eligible for a variety of potential credits. Common types of tax incentives include, but aren’t limited to, the following:
- Investment credits
- Employment credits
- Sales/use tax refunds
- Contractor tax refunds
- Property tax abatements
- Forgivable loans or low-interest loans
- Job training funds
Why Apply?
There are many advantages to applying for tax incentives. An obvious perk is it provides another way to generate cash flow, a crucial benefit as many organizations aim to defend against ongoing inflation. Other ways businesses benefit from tax incentives include:
- Reducing your income tax liability
- Generating cash flow from sales and use tax refunds
- The ability to hire and retain more employees
- Increasing ROI for a project
- Funds availability for larger expansion opportunities
As you learn the different types of incentives and the positive impact they can have on an organization, you may be wondering if it all appears too good to be true. While there are numerous benefits for businesses seeking to use incentives, there are just as many benefits for states to implement them. States see tax incentives as a way to boost their local economies, encouraging current businesses to stay within state lines and new ones to move in. Tax incentives help increase the overall tax revenue for states, including the income tax base, the property tax base, the sale/use tax and more.
Eligibility
Before you apply for tax incentives, there are eligibility requirements your business must meet. The below graphic goes through some of the guiding questions our team presents to clients to see whether they may be eligible for certain incentives.
Help Is Out There
Tax incentives are a real game changer for businesses, but it does take time and effort to understand what options are available and whether your business qualifies. If you don’t already have a trusted tax advisor, you may want to consider partnering with one who can assess your upcoming business plans and structure to determine your incentive eligibility.
Our firm offers tax incentive services that take the guesswork out of applying for tax benefits. We collaborate with clients to determine which tax incentives they qualify for and perform the tax compliance work so that they can focus on other business areas and enjoy the results.
If you’re curious to learn more about how you can maximize your tax benefits, we’d be happy to assist you. Fill out the form below to get a head start, and one of our specialists will help you through the next steps.
Our team is standing by, ready to help you optimize your tax benefits!
