According to NPR, applications to start new businesses hit a new record in 2021. That year, 5.4 million entrepreneurs applied to begin a new business.
Many Americans want to start new companies. For several people, working for themselves is the American Dream. However, starting a business can be an expensive process.
Several would-be entrepreneurs worry that the expenses of running a business make it nearly impossible to stay open. Fortunately, the government provides some small business assistance to help your business remain operational.
That’s why the government offers small business tax credits to company owners. These tax credits can alleviate many financial burdens, making them essential for business owners to know. We’ll explore these tax credits below, so read on to discover more!
General Business Tax Credit
As one of the most prominent tax credits for small business owners, this credit motivates people to undertake specific business activities. These include buying electric vehicles for the company or retaining employees.
Each of these credits technically counts as separate small business funding. So, you’ll need to fill out a different form for each of these credits. Then, you can total them on your General Business Tax Credit Form 3800.
Disabled Access Credit
Small businesses should always endeavor to make their services accessible to anyone. This accessibility includes creating handicap accessibility for potential customers and employees.
Creating a disabled-friendly business requires significant attention. It involves:
- installing ramps
- upgrading restrooms
- providing braille text
- creating wider lanes.
Your business becomes eligible for this credit if you have 30 or fewer full-time employees. Alternatively, you can qualify if you have a total revenue of $1 million.
The Paid Leave Credit
One cost of running a business is providing benefits for employees. These benefits include paid leave, such as sick days or caregiving time. The American Rescue Plan extended this credit to small and midsize businesses that paid employees to take time off.
This credit officially ended as of September 2021. However, businesses can still retroactively claim this credit on their tax forms if companies provided this paid leave during 2020-2021. You can still benefit from this policy if you run your business during COVID.
Employee Retention Credit
Like the Paid Leave Credit, this financial assistance for small businesses stems from governmental COVID policy. The ERC became official policy when Congress signed the CARES Act.
The employee retention tax credit provides tax deducting for small businesses that kept most of their employees on their payroll. The credit determines how many employees businesses need to keep based on the number of employees they had in 2019.
Once again, this policy officially ended in September 2021. However, businesses can still retroactively claim this credit if they discover they qualified during the eligible timeline. You can learn more about this at the employee retention credit faq linked here.
Discover the Best Small Business Tax Credits for Your Business
These small business tax credits can prove tremendously helpful for many businesses. However, several other credits exist that can help your company.
So, talk with a financial advisor to find the best tax credits for your company. Soon you can get the small business funding you need to operate!
We hope you enjoyed this article! If so, check out our other business tips today. We have several pieces that provide critical insights to improve your business performance.