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Tax Incentives to Help Your Business Go Green

Wed, 07/10/2013 - 6:53am | by Guest Contributor

You probably have a lot of personal incentives to make your business eco-friendly.  Likely you live and work in a beautiful community that you would like to preserve, not only for yourself and the customers that support you, but also for future generations of residents, including your children.  And keeping the environment clean is not only good for your health; it is also great for the brand image of your business.  On the other hand, many small businesses simply don’t have the extra cash on hand to make the eco-friendly upgrades and changes that they’d like to.  Fortunately, the government has become more committed to helping businesses that want to be environmentally responsible.  They’ve implemented a number of tax incentive programs that encourage businesses to do more for the environment by allowing them financial breaks for their efforts.

U.S. Department of Commerce Sustainable Business Clearinghouse: http://sbc.trade.gov  (search by state)

The easiest incentive to take advantage of is a tax deduction for commercial buildings.  Of course, this only works if you build or purchase a structure for your business, but with property values so low at the moment, it could be a great choice for the business owner that has some capital in hand (you can add to your business assets rather than blowing money on a lease). 

If you can cut your energy usage by 50% or more, through the use of energy-saving lighting, heating/cooling systems, equipment, and so on, you can receive up to $1.80 per square foot of space in tax deductions, which is nothing to scoff at (plus, you’ll be saving 50% on your energy bill).  So implementing green solutions may cost you initially, but you stand to save a lot in the long run.

The federal government may also reward your business with tax incentives for using alternative energy sources; if you switch to solar, wind, water, or geothermal power, you could receive a tax credit of 10-30%. Adopting a policy that incorporates the three Rs (reduce, reuse, recycle) could also put money back in your pocket. 

When you opt to reduce waste by reusing or recycling property, equipment, and machinery for your business, you could qualify for a break on your taxes. 

Of course, going green with your work vehicles also comes with tax incentives, including potential rebates and deductions at both the federal and state level.  Alternative-fuel, hybrid, and electric vehicles may cost more up front, but you’ll save on gas, cut down on pollution, and you could even receive some government money back for your efforts, making these purchases a lot more appealing.

Of course, there are also many states that want to encourage local businesses to adopt eco-friendly standards and practices.  For this reason, they could offer tax incentives to use green energy and building practices by providing tax exemptions or even financing for such projects. 

Do your homework to find out if your state has any tax incentives in place to foster eco-friendly business operations.  You have enough to worry about with paying employees, purchasing manufacturing materials, and shelling out for your many insurance policies (from employee health benefits to contents insurance for tenants (if you have a lease). 

You shouldn’t have to suffer financially for doing your part for a cleaner environment for all.

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