Overview
Many business owners who process payments through merchant accounts are unaware that they may qualify for valuable business credits — both tax credits offered by the IRS and promotional statement credits offered by banks or payment processors.
This article outlines the main types of credits and incentives available, how they work, and how your business can take advantage of them to reduce costs and increase profitability.
1. Federal Business Tax Credits
The IRS provides several tax credits that directly reduce your business tax liability when you meet certain qualifications. These credits apply to most small businesses, regardless of whether you use merchant accounts — but since nearly all businesses process payments, they are especially relevant.
|
Credit Name |
Description |
How It Helps Your Business |
|
Work Opportunity Tax Credit (WOTC) |
A credit for hiring individuals from targeted groups such as veterans or the long-term unemployed. |
When hiring new staff, you can claim this credit if your employee qualifies, reducing your payroll tax burden. |
|
Disabled Access Credit |
Helps small businesses offset costs of making facilities accessible to persons with disabilities. |
If you upgrade your office or storefront to meet ADA standards, you may be eligible for a tax credit on part of your expenses. |
|
Employer-Provided Childcare Credit |
Credit for employers who provide or sponsor childcare facilities or services for employees. |
If you offer childcare benefits or plan to do so, this credit can cover up to 25% of qualified expenses. |
|
Energy Investment Credits |
Credits for investing in renewable or energy-efficient systems like solar panels, HVAC upgrades, or LED lighting. |
Offices and warehouses that adopt energy-efficient systems can recover part of their investment through tax credits. |
|
General Business Credit (GBC) |
A group of over 25 credits combined under one umbrella form. |
This credit simplifies reporting and carryover for multiple business incentives on your tax return. |
Tip: Keep detailed records of qualifying expenses, employee eligibility, and documentation for all credits claimed. Your tax preparer (or TruPoint Accounting & Tax advisor) can confirm which credits apply to your situation.
2. Merchant Account Incentives and Statement Credits
In addition to IRS tax credits, many banks and merchant-service providers offer statement credits or processing fee rebates when you open a new merchant account or meet certain processing thresholds.
For example:
- PNC Merchant Services currently offers up to $1,500 in statement credits during the first year for new accounts that meet specific volume targets.
- Other payment processors (Square, Clover, PayPal Business, etc.) occasionally provide signup bonuses or reduced transaction fees for qualifying businesses.
While these are not tax credits, they directly lower your payment-processing costs and can improve your bottom line.
How to Take Advantage
- Ask your merchant-service provider about introductory statement credits, volume bonuses, or processing rebates.
- Compare offers between providers to maximize your benefits.
- Factor in these incentives when choosing merchant accounts for new business locations or departments.
3. Credits and Incentives in Practice
If your business is growing, expanding, or opening new branches (like many TruPoint clients), here’s how you can strategically combine credits and incentives:
- Hiring New Staff: Explore the Work Opportunity Tax Credit (WOTC) for eligible hires.
- Office Expansion: Claim the Disabled Access Credit for accessibility improvements.
- Energy Efficiency: Install energy-efficient systems and claim the Energy Investment Credit.
- Merchant Accounts: Negotiate merchant account setup incentives for each new location.
Tracking these opportunities can lead to significant annual savings.
4. Key Reminders and Best Practices
- Separate Tax Credits from Promotions: IRS business credits reduce your tax bill, while merchant-service credits reduce processing costs.
- Documentation is Crucial: Always keep receipts, contracts, and eligibility proof for audit protection.
- Check for Updates: Credit eligibility rules change periodically — review annually before filing.
- Consult a Professional: Even if you handle your own bookkeeping, have a CPA or Enrolled Agent review your credits during tax season.
5. Getting Help
If you have questions about which business credits you qualify for or need assistance applying them to your tax return, contact TruPoint Accounting & Tax.
