TAXES: Everything small business owners need to know in 2021
DragonImages/Getty
- 2021 will be an important year for small businesses to file their taxes.
- Tax credits and incentives can be an effective way to offset losses from a difficult year.
- But very few small businesses take advantage of all the credits available to them.
- Visit the Business section of Insider for more stories.
2021 will be an important year for small businesses to file their taxes, as many are still reeling from financial losses during the pandemic. But tax credits and deductions can be used to offset some of your costs.
Join us March 2 at 1 PM EST for a webinar on how small businesses can master their taxes. Our panel of tax experts will answer your questions, which you can submit here. Register for the live event here.
Getting tax credits and incentives
Business tax credits and incentives can be an effective way to save money or offset losses from a difficult year, but many small businesses don't take advantage of them because they're unaware of what's available to them. The first step to getting them will be finding what your company qualifies for. Then, you'll need to regularly monitor compliance.
Some examples of tax credits would be if you provide childcare services for your employees or employ disadvantaged groups, such as the formerly incarcerated, long-term unemployment recipients, veterans, and summer youth.
6 important tax credits for PPP borrowers
Small businesses can take advantage of both federal aid under the CARES Act and certain tax deductions, including the employee retention tax credit and research and development credits. In addition, the energy-efficient building tax deduction and excise alcohol tax break were made permanent.
The business meals tax credit, commonly known as the "three-martini lunch," has been temporarily increased from 50% to a full 100% deduction.
Read more: PPP borrowers can now claim 6 important tax credits - a major change from the original rule
More about the employee retention credit
The Employee Retention Credit provides up to $14,000 per employee for eligible businesses in 2021. Businesses are eligible to claim this tax credit if they experienced full or partial shutdowns due to government orders during the pandemic or can show a 20% drop in quarterly revenue compared with the same quarter in 2019.