If your company is searching for ways to increase revenue and offset costs, one solution is lowering your effective tax rate. Your tax savings strategy should take a balanced approach to reducing your tax liability. It’s advisable to take advantage of all available tax savings opportunities, including employment tax credits.
Employment incentives are commonly overlooked because businesses don’t know how to find and qualify eligible job candidates. Additionally, they may not be familiar with the numerous tax credits available on state and federal levels.
However, the potential cost savings associated with employment tax credits are significant enough to warrant careful consideration. Learn more about how your business can lower your effective tax rate with the following tips.
Identifying Available Credits
Understanding what tax credit opportunities are available in your state [links to: MAP] and which federal credits you are eligible to pursue enables you to make more informed decisions regarding your tax savings strategy.
Expert online resources help you identify which employment tax credit opportunities are applicable to your business. You should also speak with a tax professional if you have questions about whether you qualify for a specific credit. Consultations are often free and you may discover an employment credit that offers significant savings.
Increase Your Eligibility For Employment Tax Incentives
Once you have identified the tax credits you would like to pursue, consider making changes in your organization that increase your employment tax credit eligibility.
Partnering with a tax expert is a wise decision at this stage. Your consultant helps you take some of the following steps toward boosting your eligibility rates:
- Work with community employment agencies to find qualified employees.
- Customize your hiring process based on where you operate, the types of employees you hire and your existing internal processes.
- Conduct periodic reviews to ensure your hiring process matches evolving business operations.
- Develop an employee screening process that identifies eligible new hires.
Defend Savings In The Event Of An Audit
When you pursue employment tax credits by partnering with an outsourced tax consultant, you need to ensure you receive the promised return on your investment. Having the right audit support is critical for maintaining the savings you earn.
In addition to losing your credits, you may have to pay costly fines if you are unable to support employment tax credits with proper documentation during an audit. You or your outsourced tax consultant should save required paperwork for at least three years or more following tax credit claims in order to be prepared.
Your outsourced tax consultant should also instill you with a sense of confidence as they help you claim credits by including audit support in their standard pricing. A consultant manages the more complicated details of an audit while providing you with responsive customer service at every stage of your relationship.
Once you have the right processes in place to capture employment tax credits, you are able to focus further attention on modifying them as your company goes through changes and new opportunities arise.
The key to lowering your effective tax rate is to maximize your tax savings by ensuring no detail is missed. You don’t want to leave money on the table, so pay close attention to areas of your tax savings strategy where you have questions about untapped opportunities.
Ready to learn more about strategies that help you lower your tax rate and boost revenue? Find out whether location-based tax incentives are viable for your business.
