How to Leverage Tax Credits and Help Pay For Your Business Website

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A good starting budget is often necessary for developing a website and investing in digital marketing services. Tax credits can assist in offsetting those expenses. This is a terrific choice if you want to build a new website or use digital marketing to increase sales but need assistance with the cash. In order to set aside money and invest in a website and/or digital marketing services to help your business expand, you need discover what tax credits are available for your industry. For further information and the most recent tax laws, we always advise speaking with your CPA or payroll service provider. If you don’t already have one, we can recommend a CPA or payroll service.

In this post we will review 3 simple tax credits for your business.

1. ADA-Compliant Website Tax Credit

Write Off Up To $5,000 With One Simple IRS Tax Credit

About Website ADA Compliance

ADA compliance refers to the civil rights law Americans with Disabilities Act of 1990, which many of us are familiar with. Often, when we think of ADA compliance, what comes to mind is complying with guidelines such as ensuring accessible parking outside a business or providing reasonable accommodations for employees with disabilities.

You may not realize that under the Americans with Disabilities Act, a business must also ensure its website is accessible. That’s because your business website is considered public, which falls under the ADA umbrella.

Website accessibility includes optimizing for screen readers (i.e., images with alternative text), providing audio alternatives and ensuring the site can be navigated via a keyboard, among other features designed to aid those with disabilities. There is a set of standards developed by the World Wide Web Consortium (W3C) that offers guidelines.

If Your Website Isn’t Accessible

If your website isn’t ADA compliant, your business could become the target of a lawsuit.

When an attorney targets a company for ADA compliance, it starts with a demand letter. It’s important to review the letter with your legal counsel to ensure its validity.

If the demand letter proves valid, you’ll have an opportunity to audit your website and make necessary changes to bring it into ADA compliance. Typically, you’ll want to work with website accessibility specialists who can perform the audit and either make the required changes for you or make recommendations.

If you haven’t received a demand letter, take a preemptive approach by working with your website developers to ensure your existing website, or one you are planning on launching, is accessible. You may also consider hiring an outside expert.

Tax Credit Eligibility And Filing

Many small businesses that incurred expenses for ADA compliance (whether for website accessibility or other approved expenses) may qualify for the tax credit.

According to the IRS, a small business qualifies if it had gross receipts of $1 million or less or fewer than 30 full-time employees in the preceding tax year.

You can receive up to 50% of eligible expenses, including costs associated with website ADA compliance, in the form of an IRS tax credit. The only caveat is that the expenses must be between $250 and $10,000 for the taxable year.

Claiming the tax credit is simple using IRS Form 8826 (Disabled Access Credit). Your accountant or tax specialist can confirm you qualify and that you have eligible expenses (listed on the second page of Form 8826).

Complying with the ADA guidelines for your business website is an excellent way to earn a tax credit of up to $5,000 and follow good business practices. The Americans with Disabilities Act helps ensure people of all abilities have access to public spaces and places. When your website is accessible to all, it’s a win-win situation!

2. Work Opportunity Tax Credit Program (WOTC)

Business owners rejoice! The Consolidated Appropriation Act has extended the Work Opportunity Tax Credit (WOTC) program through the end of 2025.

Roughly 25% of all U.S. employees qualify for WOTC tax credits. The credits can range from $2,400 to $9,600, depending on worker category, number of hours worked and wages earned. For small business owners with employees, taking advantage of WOTC could save you thousands of dollars.

Let’s take a quick tour of the important things you should know about WOTC, like:

  • What Work Opportunity Tax Credits are
  • How they can benefit your business
  • How much you could be making
  • How to take advantage of the program
  • How Heartland helps

Sorry, What is the Work Opportunity Tax Credit (WOTC) Program?

Quite simply, the Work Opportunity Tax Credit (WOTC) is a tax incentive program available for employers who hire and retain people from groups who have had difficulty securing jobs.

And whether or not you realize it, you’ve likely hired at least a handful of employees who are WOTC eligible. Here are a few of the included categories:

  • Veterans
  • Recipients of “Temporary Assistance for Needy Families”
  • Food stamp recipients
  • Designated community residents
  • Ex-felons
  • Supplemental security income recipients
  • Long-term unemployment recipients
  • Summer youth employees

3. Employee Retention Tax Credits

The Employee Retention Tax Credit (ERTC) is a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act intended to help workplaces keep employees on their payroll during the downturn caused by the COVID-19 pandemic. More specifically, the ERTC is a fully refundable credit that’s equal to 50% of qualified wages, up to $10,000 of wages per employee. Read on to learn more about the fully refundable tax credit.

What Is the Employee Retention Tax Credit (ERTC)?

The Employee Retention Tax Credit (ERTC) is one of many relief provisions included in the CARES Act to encourage small businesses to keep employees on staff instead of furloughing or laying them off. The credit is equal to 50% of qualified wages paid to an employee between March 12, 2020 and Jan. 1, 2021, including qualified health plan expenses. The maximum amount of qualified wages that can be claimed is $10,000, which means the maximum credit for any one employee is $5,000.

The ERTC is fully refundable, and it is applied to the portion of payroll taxes paid by the employer. The IRS has developed a plan to allow eligible businesses to receive an advance payment on their credit. This is meant to alleviate liquidity concerns held by many businesses claiming the ERTC.

Who Is and Isn’t Eligible for the Employee Retention Tax Credit?

Unlike other, more broadly applicable provisions mentioned in the CARES Act, the ERTC is only available to certain qualified employers whose businesses have been affected by the coronavirus pandemic. These include most types of businesses, except for self-employed individuals and government employers.

There are two ways to qualify for the ERTC as an eligible employer. According to the IRS website, you either need to:

  • Fully or partially suspend operations at any point during 2020 due to a coronavirus government mandate.
  • Show a significant decline in gross receipts during a calendar quarter in 2020. To qualify under this requirement, gross receipts of any given quarter must be less than 50% of the gross receipts of the same quarter in 2019.

If a business has fewer than 100 employees, all employees are eligible. If a business has more than 100 employees, only those who are being paid but not providing a service due to coronavirus-related cutbacks are eligible.

Note that any employers who receive a Paycheck Protection Program (PPP) loan are not eligible for the Employee Retention Tax Credit. In addition, employers cannot double-claim employees and their wages in relation to the Family and Medical Leave Act (FMLA) and the Work Opportunity Tax Credit.

To read more about the 10 eligible groups, you can check out this page on the IRS website.

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