Business taxes are an unavoidable expenditure for any company, but there are many ways to reduce them. This article covers some methods to save money when tax season hits.
Use Environmentally Friendly Vehicles
If your business uses vehicles, you can cut its business tax burden by prioritizing environmentally friendly vehicles. For instance, some electric vehicles trigger a tax credit.
Invest in Solar Energy
Companies that invest in solar energy have two resulting avenues toward reducing their business taxes. One, known as the investment tax credit, is available to companies that install solar-energy-generating equipment. This credit triggers in the tax year the company installs the equipment.
The other tax-reducing perk is known as the production tax credit, which lowers taxes if a company generates electricity by solar means or with certain alternative technologies. This credit lasts for 10 years after the solar system or other technology goes into use.
Donate to Charity
Many small businesses make donations to charity. This can lead to positive press and a good feeling among employees, but it also has a financial benefit, as donations often can double as tax deductions. Making donations just for the tax write-off isn’t ideal; however, if your company is going to make donations for a good reason, it might as well reduce its business tax obligations in the process.
Depreciation is a widely used method that can lower business tax payments year after year. It does so by letting companies offset the costs caused by the natural deterioration of equipment and other property over time. Certain eligibility guidelines apply — for instance, land is not depreciable — but you may be surprised at how much of your business’s property qualifies for depreciation.
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