With the March 17th, 2014 deadline approaching, many corporations are preparing to file their 2013 tax returns. With this in mind, we present to you 5 overlooked corporate tax deductions/credits for small and medium businesses:
- Start up costs – costs incurred prior to doing business should be capitalized and amortized over a 180 month period. However, taxpayers can deduct up to $5,000 of eligible expenses in the first year.
- Software – While you may not think of software as a tangible asset and therefore feel that it should be capitalized and amortized like other intangible assets, the code allows taxpayers to either Section 179 expense, or take bonus depreciation, on software that has not been substantially modified.
- Research and Development – Research and development expenses can either be capitalized or expensed outright, whichever is better for your current tax situation. Additionally, these expenses may be eligible for tax credits.
- Pension expenses- For cash basis taxpayers, there is still hope to lower your 2014 tax bill. Pension and profit sharing arrangements can be deducted on the 2013 return and paid in 2014; you just must pay the pension prior to filing (including extensions).
- Small employer health insurance credit – with all the press on Obamacare, this credit has gotten lost in the shuffle. If you have less than 25 full-time employees and the average annual wages per employee are less than 50,000, you may qualify for this credit.
There are many additional often overlooked deductions that we find for our clients. If you have any questions, or if you would just like us to look over your return, please do not hesitate to call us.
Edward McWilliams, CPA
Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.