Summer is a great opportunity to reevaluate some of your business practices and determine if there are any opportunities to save tax dollars that can be implemented before the tax year comes to a close. Many business owners aren’t aware these credits and opportunities exist. With tax season and the major audit season having wound down, now is the best time to take a look at some of these projects and see if there are strategies out there to better your business, and even save you money.
Below is a list of some important items to consider now:
Research and Development Credit Study
The research and development tax credit is perhaps one of the most underutilized tax credits. There are misconceptions and confusion about what types of research and development expenses qualify for the credit. In most cases, all that it takes is a process or service started during this year that is new for your business, not necessarily new to the world. A research and development credit study can help you determine if you have any expenses or projects that qualify. The resulting tax credit is 20% of any expenses that qualify reducing the tax liability of your business.
Sales and Use Tax Analysis
As states struggle to find additional tax revenues, sales and use taxes have become a hot topic and target for audits. Complying with and paying all of the required sales and use taxes are imperative to avoid costly audits and penalties. In many cases, businesses are paying sales and use taxes they aren’t required to, causing unnecessary tax expense for both a business and its customers. A sales and use tax analysis can help determine any areas of concern. We can get you in compliance with all required filings and if you’ve overpaid, we can help determine the amounts and file any amended returns to claim a refund.
In this age of complex and ever-advancing technology, keeping up with the changes in software programs for your industry is imperative to maintaining a competitive advantage. Utilizing the most efficient technology for your business can increase efficiency, create more utilizable reports for management, and lower overall operating costs. We have knowledge of the most up-to-date platforms available for clients in all types of industries. We can help to analyze what you’re currently using and, if necessary, recommend any updates or changes to be made, as well as help you implement the changes and train you on their operation.
State Nexus Studies
State tax laws are complex and constantly changing. Determining whether your business has nexus, or a taxable presence, in a state is important to remain compliant with all tax laws and avoid costly penalties for not filing. As your business and customer base grows, you’ll most likely find yourself doing business in several states. Do you need to register your business in those states and begin filing tax returns? Perhaps you’ve registered in the past and have been submitting returns in states that no longer require filing. A state nexus study is a comprehensive examination of your business to determine all registering and filing requirements.
International Business Consulting
Are you a manufacturer who is exporting products overseas? Perhaps you make a component part that eventually becomes part of a product that is shipped overseas. Or do you provide engineering services in the U.S. for buildings built outside of the country. If so, an IC-DISC (Interest-Charge Domestic International Sales Corporation) could be a great tax savings vehicle for you. An IC-DISC is a separate corporation acting as a sales agent for your foreign sales and receives commission income from your current business entity. Since an IC-DISC is a tax-exempt entity, the commission income is not taxed, and when it distributes the income to its owners through a dividend, it does so at preferential rates (15% or 20% depending on your income levels). In turn, the commission expense paid to the IC-DISC is deductible by your current business and lowers your taxable income. We can consult on your individual situation and determine whether an IC-DISC would be beneficial for you.
Cost Segregation Study
If you have recently purchased a building or plan on buying a building in the future for your business, a cost segregation study can be a useful tool to minimize the depreciation recovery time of your purchase. A cost segregation study is an analysis of the components of a building’s structure, breaking out certain areas of the property into separate categories to be depreciated (expensed) over a shorter time frame than the building itself. The shorter depreciation lives allow you to take larger depreciation deductions than you normally would in the early years after the purchase. This means more money in your pocket now by reducing your tax liability.
Business Valuation Services
Owners are often curious about the value of their business as they consider options for succession planning. Who is going to take over the business when you retire? Are you considering selling to an outside party? Taking the time to discuss your plans with us is a useful step in making sure the business and its owners are prepared for the future. Using a variety of methods, a business valuation is an advisory service where we provide an estimate of the business’s value; a crucial piece of information when you’re making decisions.
Many of these business services require time and effort, but they all can provide better insight into your company’s operations and give you the direction you need to make sound decisions. Don’t wait until the end of the year or when you have a looming decision. Contact us today and let’s schedule some time to answer these questions.
Feel free to contact your Hobe and Lucas representative, call our main line at 216.524.8900 or email us at email@example.com.