5 Business Tax Credits Your Family-Owned Small Business Should Know About

Running a family-owned small business is no small feat. From managing day-to-day operations to planning for long-term growth, every dollar saved matters. That’s why taking advantage of available tax credits is a smart move that can help your business thrive. However, many small business owners may not be aware of the numerous tax credits available to them. Here, we highlight five key tax credits that could reduce your tax burden and help reinvest in your business.

1. Work Opportunity Tax Credit (Form 5884)

If your business hires individuals from certain target groups that face significant barriers to employment, you may qualify for the Work Opportunity Tax Credit (WOTC). Eligible target groups include veterans, long-term unemployed individuals, and individuals receiving government assistance. This credit can offset part of your costs in hiring and training employees while creating more opportunities for those in need.

Why It Matters for Small Businesses:

• Encourages hiring diversity and inclusion.
• Provides a maximum credit ranging from $2,400 to $9,600 per employee, depending on the category.

2. Disabled Access Credit (Form 8826)

If your family-owned business invests in making your premises more accessible to customers or employees with disabilities, you could qualify for the Disabled Access Credit. This credit is designed to encourage small businesses to comply with the Americans with Disabilities Act (ADA).

What Expenses Qualify:

• Installing ramps or elevators.
• Modifying restrooms for accessibility.
• Providing accessible formats for documents (e.g., Braille or large print).

Why It Matters for Small Businesses:

• Covers up to 50% of eligible expenses, up to $10,250.
• Helps create an inclusive environment while benefiting from financial relief.

3. Credit for Increasing Research Activities (Form 6765)

Don’t be misled by the word “research”—this credit isn’t just for scientists in lab coats. If your business innovates or improves processes, products, or software, you may be eligible for the Research & Development (R&D) Tax Credit.

Activities That Could Qualify:

• Developing a new product or improving an existing one.
• Experimenting with new materials or processes.
• Enhancing productivity with innovative solutions.

Why It Matters for Small Businesses:

• Reduces your tax liability by offsetting R&D investment costs.
• Encourages innovation to keep your business competitive.

4. Credit for Employer-Provided Childcare Facilities and Services (Form 8882)

If your business supports employees by providing childcare or helping fund childcare costs, you could qualify for this credit. This is a great way to foster employee satisfaction and retention, especially for family-owned businesses that value their employees as part of the family.

Why It Matters for Small Businesses:

• You can claim up to 25% of the childcare facility costs plus an additional 10% for resource and referral costs.
• Provides a tangible benefit to your workforce, enhancing loyalty and productivity.

5. Energy Efficiency Home and Business Credits (Form 8908, Form 8911)

If your business has moved toward energy efficiency by adopting renewable energy solutions like solar panels, energy-efficient windows, or alternative fuel vehicle refueling equipment, you may qualify for energy-related tax credits.

What You Could Claim:

• Energy Efficient Home Credit (Form 8908): Encourages businesses in residential construction to improve energy efficiency in homes they work on.
• Alternative Fuel Vehicle Refueling Property Credit (Form 8911): Provides credits for installing EV chargers on your business property.

Why It Matters for Small Businesses:

• Helps you save on energy costs while contributing to environmental sustainability.
• Positions your business as a modern, eco-conscious leader in your community.

How to Claim These Credits

Claiming these credits usually involves filing the specific forms mentioned alongside Form 3800, General Business Credit, with your tax return. Consult with your tax professional or accountant to ensure you’re meeting eligibility requirements and to maximize your savings. The IRS website provides detailed guidance on each credit, including necessary forms and instructions.

Save Today & Build For Tomorrow

Leveraging tax credits not only helps you reduce your yearly tax liability but can also provide extra funds to reinvest in your business. Whether it’s hiring more employees, expanding your premises, or innovating products, these credits allow your family-owned small business to grow and thrive.

Start making the most of these credits this tax season, and consider speaking with your accountant today to see which ones apply to your business.

By being proactive and knowledgeable about what’s available, you’ll be setting your business up for both short-term savings and long-term success. Don’t miss out on these opportunities to optimize your financial situation and take advantage of all the benefits available to your family-owned small business.

Remember, these credits are not just for big corporations – they are designed to support and encourage the growth of small businesses like yours. So don’t hesitate to take advantage of them! Your hard work and dedication deserve to be rewarded, and these tax credits are just one way to do that.