Types of Tax Credits You Might Not Be Utilizing
Running a marketing agency can be a lucrative business, but it’s not without its challenges. One of those challenges is managing your taxes effectively. There are many tax credits available to businesses that can help reduce their tax liabilities, but many of these credits are under-utilized.If you’re a marketing agency owner, here are some tax credits you might not be utilizing:
1. Work Opportunity Tax Credit (WOTC)
The WOTC is a tax credit that provides incentives for employers to hire workers from certain groups. These groups include veterans, ex-felons, and individuals who receive public assistance. If you hire employees from these groups, your business may be eligible for the WOTC.
Marketing agencies can benefit from this credit, as they often hire employees from diverse backgrounds. However, many agencies aren’t aware of the WOTC or don’t know how to apply for it. By taking advantage of this credit, you can reduce your tax liability and support your local community.
2. Research and Development Tax Credit
The Research and Development Tax Credit provides incentives for businesses that engage in research and development activities. This credit is available to any business that develops new products, processes, or software.
Marketing agencies that conduct market research or develop new advertising techniques may be eligible for this credit. By investing in R&D, you can improve your agency’s competitiveness and reduce your tax liability.
3. Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit is available to small businesses that offer health insurance to their employees. This credit can be as much as 50% of the employer’s contribution toward the employee’s health insurance premium.
Marketing agencies that provide health insurance to their staff may be eligible for this credit. By offering health insurance, you can attract and retain top talent, while also reducing your tax liability.
4. Employee Retention Credit
The Employee Retention Credit was introduced in response to the COVID-19 pandemic and provides incentives for employers to keep employees on their payroll. This credit is available to businesses that experienced a decline in revenue due to the pandemic.
Marketing agencies that were impacted by the pandemic may be eligible for this credit. By keeping your employees on payroll, you can maintain your agency’s operations and reduce your tax liability.
As a marketing agency owner, managing your taxes can be challenging. However, by taking advantage of tax credits, you can reduce your tax liability and reinvest those savings into your business. The tax credits listed above are just a few examples of credits that your agency may be eligible for. Be sure to consult with a tax professional to learn more about your eligibility and how to apply for these credits.