Are you paying close attention to tax credits? Over 50% of CFOs admitted they had room to improve in terms of knowing what untapped resources might be available in terms of tax benefits.
Tax credits and incentives at federal, state and local levels can be hugely advantageous to your company. But keeping track of what’s available and what your business qualifies for can be challenging.
In fact, 20% of CFOs admitted they were “not at all aware” of potential tax credits for their company, according to a new survey from Ernst & Young. Thirty-six percent weren’t much better off, saying they were only “somewhat aware.”
Only 16% claimed to be “very aware” of the tax credits available to their companies.
Talk to your tax team
Why are so many CFOs in the dark about credits and incentives? It could be because of a disconnect between the finance chiefs and the tax department, or finance team responsible for taxes.
Because CFOs don’t usually check in with the tax department – or the finance workers responsible for handling taxes – when strategizing or planning projects, the tax team doesn’t hear about projects that would qualify for incentives until it’s too late to take advantage of the tax breaks.
One solution: Drop by your tax team’s offices or shoot them a quick email when you begin planning something new. That way, they’ll have plenty of time to apply for any tax credit your new project may qualify for. Better collaboration can lead to more tax breaks.
It may seem like obvious advice, but according to the survey, only 27% of CFOs said they were “very collaborative” with other groups in finance – and that includes the tax team.
One more topic to talk about with the group in charge of taxes: Local incentives.
Local tax credits and business incentives can be especially hard to keep track of since they vary from town to town. But, as cities have grown more competitive to attract and keep business located in their jurisdictions, local business incentives have become more common and varied.
Most local incentives come with stipulations that companies must give back to the community with jobs or charity. But the advantages of the tax breaks make it well worth it.
If your tax team isn’t up on local incentives, ask them to investigate. It could wind up saving your company big.