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Tax advantages to new businesses

oldermanstanding26239732.jpgAs you are starting a new business, there are a number of tax advantages you should be on the lookout for. Many new businesses are able to save hundreds, even thousands of dollars a year on their taxes due to some great tax breaks you may be unaware of.

Capital allowances for purchasing new equipment or even leasing equipment for the new business are available. There may even be tax savings for changing some of your equipment to energy efficient appliances. Find out which appliances and other equipment is available that can save you money with your utility costs and that you can claim on your taxes.

Writing off certain assets against your taxable income is easy to do if you know what tax savings to look for. Here are some common capital allowances you can claim:

  • Machinery

  • Cars - "green cars" such as those that function on electricity or solar energy over gas

  • Plant equipment

  • Long life assets - this is usually equipment that you can use for at least 25 years or longer.

  • Adding insulation and other building modifications

  • Installing new heating and cooling systems.

As you go through the various tax breaks for new businesses, you will be able to easily save $50,000 or more a year on taxable income. Cars are one of the biggest expenses you will have. The cost to keep the car full of gas can be deducted up to a certain amount per mile you drive. This is a huge savings if you have several cars. Most cars that are producing lower emissions will allow you to deduct 20 percent of the car capital each year. If the car is not owned by the business and you need to use it for personal use, you will need to claim it on your personal taxes.

Right now the government is making a big push to save money on utilities and they are encouraging companies to go green. You can significantly cut your companies expenses by implementing some green strategies. Something as simple as changing the light bulbs will save you money on your energy costs. Installing new insulation will cut your costs dramatically on your heating and cooling expenses. It may be free to insulate your building as there is a big rebate program going on right now from the government. You will need to find an approved vendor to come and spray your attic with new insulation in order to cut your costs on heating and cooling. There are several other tax credits you will find if you are able to purchase the right type of equipment or machinery for the company that will contribute to the atmosphere and help to cut back the use of energy by larger companies.

Are you lending some of your equipment to your employees? Lending certain equipment to employees may be a subject to tax breaks if the equipment provides significant value and is used by the employee for business-related purposes. Company vehicles are often lent to employees and can deducted from your new business taxes.

A big tax deduction you will have is the money you spend on research and development. The government will pay if you qualify for their particular program and meet their specifications. You will need to do appropriate research in order to quality for the tax credits. Make sure you keep track of the expenses as you will need to submit them to the government to document how much money was spent on research and development.

Check the Small Business Administration website to learn more about tax advantages for new business to make sure you are qualifying for them.

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