What are the main tax benefits for small businesses in 2024?.

Small businesses in 2024 can benefit from various tax incentives designed to encourage growth and innovation. These include the Qualified Business Income Deduction, which allows eligible businesses to deduct up to 20% of their qualified business income, and the Employee Retention Credit, which offers payroll tax relief for retaining employees during economic downturns.

Key Facts

• The Qualified Business Income Deduction was established by the Tax Cuts and Jobs Act in 2017.
• The Employee Retention Credit has been extended through 2024 to support businesses affected by COVID-19.
• Small businesses can also utilize Section 179 expensing to deduct the full purchase price of qualifying equipment.
• Research and development (R&D) tax credits can offset costs related to innovation.

Examples or Use Cases

For instance, a small tech startup investing in R&D can claim tax credits that may cover up to 20% of their research expenses, while a local restaurant can utilize the Employee Retention Credit to help pay for wages during slow periods.

Common Mistakes / FAQs

• Many small business owners overlook deductions for home office expenses or vehicle use.
• It’s crucial to keep accurate records and receipts to substantiate claims.
• Consult a tax professional to maximize potential benefits and ensure compliance.