Maximizing Small Business Tax Benefits: Exploring Tax Credits and Deductions in Ohio

Are you taking advantage of available Ohio small business tax benefits to strengthen your company’s bottom line?
Picture of Scott Hohman, CFP®, AIF®

Scott Hohman, CFP®, AIF®

Running a small business involves many responsibilities, and one of the critical aspects is managing your tax obligations effectively. Understanding the tax credits and deductions available to small businesses in Ohio can significantly impact your bottom line. By taking advantage of these incentives, you can optimize your tax planning strategy and potentially increase your savings. In this article, we will explore several valuable Ohio small business tax benefits specifically tailored for entrepreneurs operating in the Buckeye State.

Ohio Small Business Deduction

The Ohio Small Business Deduction is a significant benefit for business owners in the state. It allows eligible small businesses to exclude a portion of their business income from taxation. As of the 2021 tax year, the deduction applies to the first $250,000 of business income for sole proprietorships, partnerships, and limited liability companies (LLCs). For businesses organized as corporations, the deduction applies to the first $100,000 of business income.

Research and Development (R&D) Tax Credit

Ohio provides an R&D Tax Credit to encourage small businesses to invest in research and development activities. This credit is available to businesses that engage in qualified research expenses, including costs related to developing new products, improving existing processes, or conducting technological advancements. The credit can offset up to 7% of the qualifying expenses, potentially reducing your tax liability and freeing up funds for further innovation.

SEE ALSO: Cultivating Prosperity: Financial Planning Strategies for Ohio’s Farmers and Agribusinesses

Work Opportunity Tax Credit (WOTC)

The Work Opportunity Tax Credit is a federal program that also provides Ohio small business tax benefits. It offers tax incentives to businesses hiring individuals from targeted groups, such as veterans, ex-felons, and long-term unemployed individuals. By hiring from these groups, small businesses can not only contribute to their communities but also benefit from tax savings. The WOTC provides employers with a credit ranging from $1,200 to $9,600 per qualified employee, depending on the target group and hours worked.

Ohio Motion Picture Tax Credit

If your small business operates in the film, television, or digital media industry, Ohio offers the Motion Picture Tax Credit to support and attract production projects. This credit can be claimed against Ohio commercial activity taxes and applies to eligible expenses incurred during production, including wages paid to Ohio residents and non-residents. By taking advantage of this credit, small businesses in the entertainment sector can reduce their tax liability and promote growth within the industry.

Energy Efficiency Tax Incentives

There are also Ohio small business tax benefits related to energy efficiency. These tax incentives encourage small businesses to invest in energy-efficient technologies and practices. The state offers various credits and deductions for initiatives such as energy-efficient appliances, lighting systems, and renewable energy installations. By adopting energy-efficient measures, businesses can not only reduce their environmental footprint but also benefit from tax savings and potentially lower utility costs in the long run.

SEE ALSO: Exit Planning vs. Succession Planning: A Primer for Small Business Owners

Want to Know More About Ohio Small Business Tax Benefits?

Navigating the complex landscape of small business taxes can be overwhelming, but understanding the tax credits and deductions available in Ohio can be immensely beneficial for your bottom line. By taking advantage of the Ohio Small Business Deduction, R&D Tax Credit, Work Opportunity Tax Credit, Motion Picture Tax Credit, and energy efficiency incentives, you can optimize your tax strategy, reduce your tax liability, and free up resources to reinvest in your business’s growth and success. Consult with a qualified tax professional to ensure you maximize these opportunities and stay compliant with Ohio’s tax laws. Remember, proactive tax planning can go a long way in securing your small business’s financial health.

If you have questions about your small business tax plan or financial strategies, we can help! Reach out to the Resolute team today to learn more about how we serve our small business clients.

The views expressed represent the opinion of Resolute Wealth Advisor, Inc. (RWA). The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While RWA believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the RWA’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.

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