How to Leverage Tax Credits for Business Growth: A Guide for Entrepreneurs

Tax credits are one of the most effective ways to lower your tax burden and increase your business’s cash flow. Unlike deductions, which only reduce your taxable income, tax credits directly reduce the amount of taxes owed. If you haven’t considered tax credits yet, it’s time to take a closer look.

R&D Tax Credit
If your business develops new products or processes, you may qualify for the R&D tax credit. The IRS allows you to claim expenses related to research activities, such as employee wages, materials, and overhead costs.

Work Opportunity Tax Credit (WOTC)
Hiring employees from certain groups (e.g., veterans or people with disabilities) can make you eligible for the WOTC. You may receive up to $9,600 per qualified employee.

Disabled Access Credit
Businesses that improve accessibility for employees or customers with disabilities can qualify for the Disabled Access Credit. Eligible expenses include installing ramps or purchasing adaptive technology.

Employer Credit for Paid Family and Medical Leave
Businesses that provide paid family and medical leave can claim up to 25% of wages paid during leave. This is helpful for small businesses offering paid leave but needing financial assistance.

Energy Efficient Commercial Building Deduction (Section 179D)
If you’ve made energy-efficient improvements to your commercial building (e.g., upgrading HVAC or lighting), you may qualify for a deduction of up to $1.80 per square foot.

Why Tax Credits Matter
Tax credits directly reduce the amount of tax you owe, offering significant savings. For entrepreneurs, they’re an effective way to boost cash flow and reduce tax burdens.

The Bottom Line
Tax credits are a valuable tool for saving money and reinvesting in your business. Be sure to consult a tax professional to maximize these opportunities.