Reducing your operating costs can be an excellent way to boost your profits and keep your business stable. Many individuals don’t realize utility bills include sales tax on the energy you’re using. As a business, you may qualify for an exemption in full or in part for these taxes. Completing a predominant use study will help you determine if you qualify for tax-exempt status.
High Sales Tax
Take a look at your most recent utility bill for your company. How much are you paying in sales tax each month? If that amount is higher than $50 per month, completing a predominant use study can give you significant savings. The utility services company will evaluate your usage and determine the percentage attributed to qualifying equipment. The rules vary by state. Some states offer an exemption on the exact percentage of qualifying use while others provide full exemption as long as your overall qualifying energy use is above a specified percentage.
Changes to Your Company
Even if you previously requested a predominant use study, you may need another one in the future. Any changes to your business could qualify you for a larger exemption. For instance, if you added new equipment, upgraded old equipment, or your business moved, your energy use likely changed as well. A new study will give you a clearer picture of your current situation and could change your exemption percentage. You may also need to get a new study if you changed utility providers.
Recover Past Expenses
A predominant use study may help with more than your utility bills going forward. Many states include language that ensures you can claim your tax exemption for prior months of service. The number of months you can backdate your tax exemption varies by state and is often two to three years, giving your business significant savings from your first study.
If you would like to schedule a predominant use study for your business, visit the Business Name. website to learn more.
