Even more so than private citizens, businesses have a lot of leeway when it comes to claiming tax deductions. Whether you run a startup or a multinational conglomerate, there’s sure to be some tax breaks you’re not taking advantage of. Below you’ll find a couple of legal loopholes that many businesses fail to capitalize on when they’re tallying up their annual tribute.
Let’s kick things off with a relevant and timely example. Under the Affordable Care Act, a small business can claim up to 35% as a tax credit if it meets a few basic requirements. While this particular break applies to only small businesses, it’s sure to save many fledgling startups a ton of money. You can also look into section 813b in regards to captive insurance to see how you can save on healthcare costs that way as well.
Regardless of the specific industry in which you ply your trade, you’ll eventually need to splurge on training for yourself or your workforce. This is a good investment in the future. More importantly, the expense associated with education is also tax-deductible. Keep track of your educational expenses whether online or off and then write them off at the end of the year.
Sales Procurement Costs
The costs of doing business are often tough to calculate when it comes to acquiring new clients. You have to schmooze and occasionally booze potential clients to get them on your side. Fortunately, all of the dough you spend on getting to know your future business partners can be written off at the end of the day.
Using captive insurance to protect your company from liabilities can actually be a great way to lower taxes. A business can drastically reduce its taxable income by creating a captive insurance company for the purposes of self-insuring against potential future liabilities. Forming captives isn’t complicated and is becoming a favorite tactic of tax-savvy businesses.
Interest on Loans
One major deduction that many businesses fail to take advantage of is the interest they’re paying on loans. If you finance a startup or an expansion via credit, you can deduct everything from interest on mortgages to interest on credit card debt. Even if you run a fairly small operation, the deductions add up quickly.
The Bottom Line
If massive corporations like General Motors, Verizon and Bank of America can use creative deductions to slash their tax bills to the bone, so can you. There are thousands of hidden tax breaks available to businesses of all sizes. If you spend a little time researching what’s possible in the tax deduction department, you can save a surprising amount of money.