Every business has the potential to improve cash flow and profit by controlling expenses typically accepted as “uncontrollable” and capturing opportunities usually dismissed as “unobtainable.”
A proactive business executive should assess the extent to which his business is capturing every dollar available via the numerous tax credit and cost reduction programs available as a result of hundreds of changes in the PATH Act, the Start-up Jobs and Innovations Act, the Affordable Care Act, various Hiring Act incentives, and others. Over 92 percent of eligible businesses mistakenly disqualify or unknowingly neglect these funds, which may be instantly realized by the business.
The 5 simplest Top To Dos include the five following assessments:
Hiring Incentives, Work Opportunity Tax Credit (WOTC)
As a result of the multitude of stimulus packages offered through various governmental agencies there exists substantial opportunities for employers to realize financial benefit through qualification for hiring incentive tax credits. You may review every applicable stimulus package through studies to determine the eligibility of current and future employees in order to assess potential tax credit. This is accomplished through live screening interviews, assistance identifying target hiring categories, and providing internal compliance guidelines to ensure future new hires are properly screened. Business owners may benefit up to $9,600 per year, per employee in tax credits.
Cost Segregation Assessment
A tax planning strategy that accelerates depreciation deductions and defers tax payments on commercial property. A team of tax professionals, structural design experts and engineers identify and re-classify commercial building component expenses. The result generates a Cost Segregation Study that identifies and maximizes tax benefits. Why wait 39 years to fully realize the benefit of depreciation deductions when you can accelerate those benefits down to as little as 5 – 7 years? The resulting benefit is superior cash flow, re-investable assets into the business and or time value of money benefits for the business/business owner. 90% of commercial properties qualify for these benefits.
“Cost Segregation studies should be performed by qualified individuals or firms such as those employing personnel competent in design, construction, auditing and estimating procedures relating to building construction.” – U.S. Internal Revenue Service
“Cost Segregation Studies are a lucrative tax strategy that should be considered in almost every real estate purchase.” – U.S. Treasury Department
R & D Tax Credit Assessment
Unfortunately, less than ten percent of eligible companies take advantage of the Research and Development Tax Credit, usually because they mistakenly disqualify themselves and deem the credits unobtainable.
The R&D Tax Credit is a federal program listed under Section 41 of the IRC and is available to companies performing a range of design work in the U.S. This is an engineering-based program that focuses on a company’s operations and processes in order to determine their qualification for incentives. Qualified activities include, but are not limited to: Develop, design or fabricate products; Develop new or improved processes; Perform prototyping or modeling; Develop new software applications; Perform testing or quality assurance; Automate internal processes; Perform any engineering functions; Develop or apply for patents; Develop new concepts or technologies; Experiment to eliminate uncertainty; Develop biotechnology processes.
The R&D Tax Credit provides an avenue to receive “tax money” back from prior years while also reducing current taxable income on a dollar-for-dollar basis.
“Although it has a well-deserved reputation for complexity and uncertainty for taxpayers, the research tax credit of IRC 41 nonetheless remains a valuable source of support to businesses.” – Journal of Accountancy
Energy Comprehensive Study
There exist two opportunities under this study and service. The first is a review of all local, state, and federal programs available to assist in Energy reduction efforts. The second is an actual study of the physical structures, wherein engineers and contractors can engage in structural changes resulting in vastly reduced energy expenses for which a bonded guarantee is available relative to forecasted savings being achieved. Nationally, energy expenses are rising annually at 11%, participants in this study may realize a savings of between 25% – 45% on average.
Property Tax Review
Outside of income taxes, the single largest recurring charge for commercial property owners are property taxes. This audit involves a review of real and personal property tax assessments which often results in the identification of opportunities for lower property tax bills. The immediate benefit is the reduction of taxes owed and the potential of refunds on prior taxes paid. The average savings realized by relative to their property tax is 12% – 20%.
These assessments represent only a few of over a dozen that can immediately generate savings for a business, freeing money for other business use: hiring new personnel, new marketing programs, investment in facilities and/or equipment.