4 Tips To Reduce Your Company’s Tax Bills And Increase Tax Savings

Written by Frances Kim. Updated Jul 30, 2015.

ThinkstockPhotos-479206903Are you happy with your current tax savings strategy to reduce your tax bills? If the answer is “no,” have you told this to your CPA or financial advisor? If not, it’s likely your CPA or financial advisor is assuming you are perfectly content with your current tax strategy.

That’s okay: With a little insight, you’re able to see where your business can take advantage of capturing tax credits and incentives offered by the government on a federal, state and local level.

The following are four expert tips to help you discover possible new savings through a number of viable tax credit and incentives:

Expert Tip #1: Take Advantage Of The Four Common Employment Tax Credits

Many businesses overlook employment tax credits when hiring, and yet there are a number of tax credit opportunities for businesses that help out with nationwide revitalization efforts.

Here are three common employment tax credits your company should consider taking advantage of:

  • Work Opportunity Tax Credit (WOTC): This is a federal-based tax credit designed to increase job opportunities for people who have certain barriers to employment. The WOTC encourages employers to hire from specific groups and the tax credit is equal to a percentage of the eligible employee’s wages.
  • Federal Empowerment Zone Tax Credit: This tax credit is an incentive for businesses located in an empowerment zone to hire and retain employees who also live in this zone. The credit is renewable each year and there is no limit to the number of employees a business can claim.
  • Federal Indian Employment Incentive: Employers who hire registered Native American Indians (and spouses of registered Native American Indians) who live on or near an Indian reservation may receive a dollar-for-dollar reduction in the business’s taxable income.

Expert Tip #2: Discover Your Cost Segregation Opportunities

Almost any taxpayer who owns or leases commercial real estate may reduce their tax bill via cost segregation. Often, businesses don’t take advantage of cost segregation due to this tax strategy’s complexity. However, it is a substantial way to increase your company’s cash flow.

Cost segregation studies are conducted to determine how much money you spend on your property from plumbing, electrical systems, lighting, telecommunications and HVAC system expenses.

Once these costs are identified, your tax service reclassifies them so they depreciate over shorter timeframes. In turn, your business may benefit from increased tax deductions and decreased taxes. And, because you are allowed to defer taxes, this strategy results in increased cash flow. 

Expert Tip #3: Go Green To Capture Energy-Efficiency Tax Incentives

Going green is beneficial to the environment and to your long-term cost-savings strategy. On a federal, state and local level, the government offers tax incentives for businesses investing in energy efficiency. The most frequently supported but still overlooked green building incentive programs are:

  • 179D deductions for energy-efficient commercial buildings 
  • 45L credits for energy-efficient residential developments 
  • Section 48 renewable energy investment tax credits and grants 

Each of these green building tax incentives rewards lower energy use for lighting, heating, cooling, ventilation, hot water systems and building envelopes.

Expert Tip #4: Be Proactive

CPAs and advisors may not necessarily suggest ways to structure your finances and business practices to reduce your company’s tax bills. They may not even know the details of these tax credits to ensure your eligibility.

That’s why it is important to speak with a seasoned tax consultant who focuses specifically on tax credits and incentives for businesses. Talk to a knowledgeable tax expert to learn what actions you should take to minimize your year-end tax burden.

Ready to learn more about how to reduce your company’s tax bill this year? Discover tips from tax experts on how to capture lucrative savings like the WOTC. 

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Topics: Employment Incentives, Cost Segregation, WOTC

Frances Kim

Written by Frances Kim

As one of the first CTI employees, Frances has held many key positions and has played an integral role in our diversification process. With more than 10 years in customer service and management, Frances’ proven adaptability has enabled her to manage projects for clients ranging from small start-ups to Fortune 500 companies.