Can Small Businesses Receive Tax Refunds? We Have The Answers.
For many people, tax season is the best time of the year; the same goes for businesses. Typically firms and people who have paid more in taxes over a year than what was due on their tax return will receive a refund of some kind, but not all businesses are treated the same. So, can a small business receive tax refunds? Taurus CPA Solutions has the answers.
What Type Of Business Qualifies For A Refund?
C-corporations are generally the one kind of business that will be eligible for a tax refund. With this said, S-corporations, nonprofits, and LLCs most likely will not qualify for a refund of any kind unless they’ve overpaid in sales tax or payroll.
Top Ways To Maximize Your Tax Refund:
- Double-Check Personal Expenses: It is unlikely that this would happen, but sometimes business owners forget to use the company card for business-related purchases and end up paying out of pocket. Business owners should record these expenses as business-related and incorporate them into their company tax returns.
- 401(k) Matching: If your company offers 401(k) matching for employees, then the amount spent on matching can be deducted as a business expense. It’s a win, win for both your business and its employees!
- Apply For Tax Credits: Even if your business is not a C-corporation, it still may qualify for tax credits. Be sure to check with your accountant to see if your company qualifies for state or federal tax credits.
- Make Payments In Advance: Has your business been doing consistently well? Do you have a solid incoming cash flow? If so, consider paying bills and other expenses in advance. Not only will this help your credit, but it will positively affect your taxes as well.
If your business does qualify for a small business tax refund, then you can start planning on how you’ll use the extra cash. Here are a few ways to use your business tax refund:
- Pay Off Debt: If your business has debt looming over it, then it might be a good idea to use the extra money from your refund to pay off any existing debt.
- Save It: If COVID-19 has taught us anything, it’s that the world can change in the blink of an eye. In the unfortunate event that your business has to close and is no longer profitable, a savings account will give you peace of mind and extra resources to rely on.
- Reinvest In The Business: Consider taking your business tax refund and reinvesting it back into the business. Is there a significant improvement you’d like to make to your business, but you never had the chance to do it? Now may be a perfect time!
The tax deadline is quickly approaching, so if your business has yet to file its taxes, it’s best to do so right away. Be sure to do some research to see if your small business may qualify for any small business tax refunds. The extra money can go a long way!
To learn more about how Taurus CPA Solutions can help your small business file their taxes, please visit our website, or give us a call at 410-465-4600. Also, be sure to follow us on Facebook and LinkedIn to keep up with our latest news.