5 Cash Flow Boosts With New Business Tax Breaks
Expanded Business Tax Breaks
Can Boost Cash Flow
The tax law that took effect in 2016 – the Protecting Americans from Tax Hikes (PATH) Act – expanded and strengthened business tax breaks that can improve cash flow for many small and midsize businesses.
Growth Management Group (GMG) has helped small and midsize businesses claim similar tax breaks to boost cash flow for over eighteen years. It’s now applying that expertise to these expanded tax saving opportunities on its unique “No Savings, No Fee” basis.
Which means you can find out whether your business qualifies for a cash flow infusion to help fund your operating activities on a completely risk-free basis. Where else can you do so with:
- No interest expense,
- No loss of equity ownership, and
- No fees if you’re not eligible for positive cash flow relief?
Cash Flow Relief That’s Often Overlooked
The PATH Act made permanent a number of deductions and tax credit incentives that expired at the end of 2014. Other significant provisions were extended for five years and a few other provisions were extended through tax years 2016-2019 and have since been extended again..
The five components of greatest relevance to the operating cash flow needs of small and midsize businesses are as follows:
- Many business tax breaks that were previously annually-renewed – like R& D credits for payroll costs related to process and product improvements – were made permanent. This removed uncertainty about whether these credits would be renewed annually. It’s also removed the resulting hesitation businesses and their accountants have had in the past.
- It also removed the alternative minimum tax (AMT) as a barrier. Previously, business owners couldn’t claim tax credits if they owed an AMT tax payment. For companies with under $50M in revenues, that’s no longer the case. And those with over $50M in revenues more than likely aren’t subject to an AMT anyway – so the impediments to R&D credits have effectively been removed.
- A new provision benefits development stage tech startups that started after 2010, had no revenue before 2012 and had less than $5M in 2016 revenues by allowing them to apply R&D tax credits to offset payroll (Social Security) taxes up to $250K/year for up to 5 years. Previously, they couldn’t use these credits because they had no income tax to use the credits against. But now – for the first time – they can use them to reduce payroll (FICA Social Security) taxes. This can improve operating cash flow to the tune of 6.2% of payroll for companies with eligible R&D activities. This includes not just tech startups but many struggling manufacturers as well – and opens up an entire new market for R&D credits.
- Bonus depreciation was locked in for 5 years. This substantially increases the tax savings associated with cost segregation studies (that accelerate depreciation) by increasing the tax deduction for certain building components by 50%. This can produce refunds of prior year overpayments for a cash flow infusion and lower tax bills going forward.
- Finally, the Work Opportunity Tax Credit (WOTC) for hiring employees from disadvantaged populations was extended through 2019 and has again been extended through 2025. It’s also been expanded to include the long-term unemployed. Individuals that have been unemployed for 27 consecutive weeks and have received unemployment compensation qualify. A typical credit of $2,400 per employee, with a maximum $9,600 credit for some military veterans, applies to target groups of eligible employees.
Better Cash Flow Means More Net Income
These are big developments that GMG is ideally positioned to help businesses capitalize on. Its 18-year record of successfully implementing tax savings and incentives with its “No Savings, No Fee” risk-free approach has occurred without a dime in IRS disallowances. GMG’s unique fee structure preserves your working capital while adding supplemental cash flow if your business qualifies.
Click the image below for an instant estimate of your potential tax savings and incentives.