Did you know that some companies are able to take a 3%
deduction for their business activities, providing they are based in the United
States? This discount applies to small businesses in the manufacturing
industry. However, there are extensive rules surrounding who qualifies for
these deductions, but, if your business meets them, it can equal some nice
savings.
This deduction, referred to as the Section 199 deduction,
applies to businesses with “qualified production activities.” The deduction can
be taken from the net income of qualified businesses. Using cost accounting
mechanisms, the tax deduction can be accurately calculated and properly
received. However, making sure all the math is correct can be tricky, which is
why it’s recommended that people apply for this deduction with the help of a
financial professional who is familiar with the deduction and its rules.
If you’re curious about whether or not your business will
qualify, consider if it engages in any of these eligible activities:
·
United States based manufacturing
·
Software or video game development within the
United States
·
Selling, licensing, or leasing items
manufactured in the United States
·
Engineering and architectural services for
construction jobs in the United States
·
Selling, leasing, or licensing movies that were
produced in the United States
Keep in mind, however, that some activities are specifically
excluded from being eligible for these deductions. Activities that are on the
excluded list include:
·
Cosmetic construction services
·
Selling food and/or beverages from a retail
location
·
Leasing or licensing of party items/materials
If your business is engaged in these prohibited activities,
you cannot qualify for the deduction. However, if your business is engaged in
one of the qualifying activities, then your next step is to speak with a financial
adviser. These professionals can tell you how to go about applying for and
receiving this great deduction.
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