You may have heard about saving money on the taxes your company pays on your utility bills. If you aren’t already aware of how you can accomplish this task, you could be missing out on valuable cost savings for your business operations. The following will help you understand what a predominant use study is and how it can help your business.
The Process
When you hire a company to complete a predominant use study, they will install equipment to monitor your energy usage, particularly related to qualifying equipment you use in your business operations. Your whole utility bill is unlikely to qualify for a tax exemption. Instead, you will receive a tax exemption on the portion of your bill that relates directly to qualifying uses. The study you have done will determine the proportion for you.
An Average Use Report
Instead of checking your energy usage over a short period, such as one month, an experienced company will take a look at your bills over the last 12 months and use specific formulas to calculate your average usage. Using the average for your utility usage is more effective for ensuring you are getting the maximum tax exemption possible instead of potentially receiving a lower deduction because your study was done during a slower period.
Tax Exemptions
Once you complete your predominant use study, you will receive documentation you can present to your utility company to reduce the taxes you pay on your utilities. However, this documentation will only apply for a certain amount of time. You will need to get regular studies to ensure you can maintain your deduction.
If you’re interested in completing a predominant use study, visit the B. Riley Financial website to learn more.
