Many of the business owners we meet glaze over when we start talking about tax incentives. Sure, creating the newest and most innovative technology is easy. Understanding federal and state tax law, well, that’s a completely different challenge.
When someone is challenged by the thought of filing their tax return and completing their tax planning each year, how can they be expected to understand tax incentives and whether they can qualify?
There are literally hundreds of federal, state and local tax incentives available to both individuals and corporations. Cutting through this long list to understand what applies is the first step in securing a tax credit or deduction that can be both material and drive additional cash flow to your bottom line.
Let’s take a look at how we work with our clients to identify and generate substantial tax savings for them that helps grow their business.
Understand which incentives apply to you
Step 1 - The first step to monetizing tax incentives is understanding if your company could qualify for one or more tax incentives. Depending on where your company is located, state or local incentives could be available to you.
Have you hired veterans (or individuals from other targeted groups)? If so, you may be able to claim a federal employment credit called WOTC.
Did you locate your business in a designated Empowerment or Enterprise Zone in your state? Many states offer additional tax incentives to companies that do.
Are you developing new or improved products, processes, software, formulas, or inventions? The federal research tax credit (and in many states, a state level research tax credit) may apply to your activities.
Do you export the products you manufacture? Setting up an IC-DISC may result in additional tax savings.
Did you recently purchase or build a building? A Cost Segregation study could increase depreciation and free up additional cash for growth or operations.
At Acena Consulting, we offer a free consultation to help you identify many of these incentives including those that we do not provide. Additionally, we help you navigate through the potential issues that may impact your ability to lower your taxes. Our goal is to help your understand the complicated world of tax incentives and generate the tax savings you need to be competitive in this global economy.
Quantify the potential value
Step 2 – So you qualify for one or more tax incentives; the next step is to understand how much value or tax savings should be available as well as your time commitment to gather the necessary information.
Our process involves gathering critical information early to calculate your tax credit (or additional deduction in the case of the DPAD) and identifying potential issues to flush out any roadblocks before you spend a lot of time and effort.
Gathering the right documentation
Step 3 – Gather documentation that will ultimately support your tax credit (or deduction) is next. Depending on the size and complexity of your company, this can be a relatively easy step or a more complicated one (think multiple locations, disparate systems, etc.).
Our process has been developed to minimize (as much as possible) your time and effort to develop the documentation needed when calculating and documenting a research tax credit, DPAD or other incentive. Our proprietary software helps us take your documentation for the research tax credit and streamline your time and effort.
You have a business to run, market to grow and products to ship. The value of your time is critical to the overall process and minimizing it is our goal.
Step 4 – Once the documentation has been gathered, the credit or deduction calculated, the next step is to determine how to utilize your increased cash flow.
Need to better understand the tax incentives that apply to you? Give us a call at your convenience for a free consultation.