SHNIDER: How much cash are you leaving on the table?

Neil Shnider, special projects consultant at the Small Business Development Center of Florida Gulf Coast University.

Photo by GREG KAHN // Buy this photo

Neil Shnider, special projects consultant at the Small Business Development Center of Florida Gulf Coast University.

Neil Shnider, special projects consultant at the Small Business Development Center of Florida Gulf Coast University.

Photo by GREG KAHN // Buy this photo

Neil Shnider, special projects consultant at the Small Business Development Center of Florida Gulf Coast University.

Now that all the dust has settled and Congress has dropped some of the tax benefits, extended others and made some of them permanent (until a new Congress changes them), let's focus on the major tax issues common with small- and medium-sized businesses. They are leaving a great deal of tax benefits unused.

Why does this happen? As I see it, either their tax adviser is not providing the advice they need or they are too lazy to be proactive to seek the information. Whatever the reason, there is a great deal of cash left out. As an example, if a company wants more cash in its pocket, and the net profit after all expenses of a company is 10 percent, the company has to generate $1,000 of sales to have $100 of cash left over, assuming inventory and receivables remain unchanged.

Well, Congress has given businesses some outstanding credits to use to increase cash flow, but how many businesses are actually taking advantage of them? A tax credit is quite different than a deduction. The following example will show the difference. If a company has a tax deduction of $1,000 and it's in the 25 percent tax bracket, it will receive a cash benefit of $250 (the tax bracket they are in is the cash savings).

If a company gets a tax credit of $1,000, it will receive a cash benefit of $1,000 since the credit is a dollar-for-dollar reduction of its tax bill and, in some cases, even if it doesn't owe any taxes it will still get the $1,000 back in a cash refund.

Think about how much cash companies are leaving on the table and how difficult it is to earn that $1,000. In my example above, to have a $1,000 in cash, the company would have to find another $10,000 of sales. In the tax credit scenario, the company does not have to earn any more money; it just has to be educated on what it's entitled to.

Let's look at some common examples of tax credits many companies may take advantage of. Keep in mind that there are always qualifications, but if the companies know the benefits, they then can confirm they qualify for the cash credits.

Work Opportunity Tax Credit — This deals with the hiring of veterans and is as high as $9,600.

Credit for Small Business Health Insurance Premiums — This address starting health insurance for employees and is as high as 35 percent of the premium paid by the employer. For example, premium paid is $18,000 the credit is $6,300.

Credit for off highway business use of fuel — For example, a landscaping business or a contractor that uses fuel for its lawn mowers or generators or other business equipment can get a credit for the excise tax paid on the gasoline.

Disabled Access Credit — Up to $5,000 for making the company's facility disabled friendly.

Credit for Social Security and Medicare — For employers in the food and beverage business where tipping is common.

These credits alone amount to more $25,000. Check with your tax advisor for qualifying rules. This is easy money compared to increasing sales by $250,000 to have 10 percent left in cash ($25,000). This is in no way suggesting that a company should not increase sales but an opportunity to put more cash into the business owner's pocket.

Congress has given these benefits to businesses. Businesses are not capitalizing on them, but continue to complain they are paying too much in taxes or short of cash flow.

Contact me if you need direction in these areas.

Neil Shnider, MBA, CPA, is a special projects consultant that focuses on business growth through finding new markets and new products/services, increasing profits and trimming costs, for the Small Business Development Center at Florida Gulf Coast University. He can be reached at the SBDC center or at nshnider@theshnidergroup.com Go to www.theshnidergroup.com for more small business information and tools.

The SBDC provides small business consultants, at no cost, to guide you through many of the business processes. These are experienced professionals who are working to benefit small businesses. The service is at no charge. Call 239-745-3700 for an appointment.

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