Although tax law doesn’t grant special status to minority-owned businesses, owners can take advantage of several tax breaks associated with launching and owning a business. We highlight some of these below.
Tax Breaks for Starting a Business on an Indian Reservation
Business owners might benefit from one or both tax credits available to those who start businesses on or near an Indian reservation. These include:
- Accelerated depreciation: The time necessary to wait before claiming depreciation on business equipment is lower if the owner primarily conducts business on an Indian reservation.
- Indian employment tax credit: Minority-owned businesses that hire employees who live on near an Indian reservation qualify to claim this credit. It provides 20 percent of the first $20,000 of wages in addition to health insurance coverage.
State-Level Tax Breaks in Special Locations
Although not specific to minority-owned businesses, these tax breaks can help business owners who operate in distressed areas. People interested in claiming this type of tax credit should check with their state government to see if it’s offered. For the states that do offer tax breaks for conducting business in a distressed area, it operates much like federal new market credits.
Tax Credits for Entering New Markets
Investors can claim a new-market tax credit when they choose to make direct or indirect investments in minority-owned businesses. The amount of tax credit equals 39 percent of the initial investment cost and must be taken over a period of seven years.
Obtain IRS Materials in Languages Other Than English
Learning about tax credits for minority-owned businesses can be difficult for business owners for whom English is a second language. Fortunately, the IRS makes its publications available in Spanish, Chinese, Russian, Korean, and several other languages. Our company would be happy to help you locate and apply for tax credits as well. Please schedule an appointment with Prime Wealth Development to learn more.