THINK YOU'VE CUT all of the corners and exhausted every small business savings vehicle possible? You may have another shot at saving with a handful of often-overlooked federal, state and local tax credits and exemptions.

Many of these tax perks are hard to figure out because they’re so complicated or just plain obscure. Rules can change from state to state, locality to locality and even industry to industry. But once you figure out which ones your business qualifies for, the savings can really add up. And you can even carry back certain credits four to five years depending on the rules in your state, says Jack Rothstein, a tax partner at PricewaterhouseCoopers in New York.

To make sure your business is getting all of the savings it can, seek out a trusted advisor with local and state tax expertise. They can often suggest a number of tax-saving strategies that are specific to your business needs. Also contact your local economic development council and chamber of commerce.

In the meantime, here are six often-neglected tax perks that can help your business save some cash.

Domestic Production Activities Deduction (Federal, State)

In 2009, companies that produce more than 50% of their products (including software and films) domestically are entitled to a federal tax deduction equaling 6% of either the income they receive from those products or an individual business owner’s adjusted gross income, whichever is less. In 2010, that deduction will rise to 9%.

As an added bonus: Some states, including Pennsylvania, Vermont and Virginia, offer the same deduction amounts for state taxes as the federal government, says Tarra Curran, managing director at accounting firm CBIZ Tofias in Boston.

Manufacturing Deductions, Credits (Federal, State)

Most small business owners take advantage of federal tax perks that let them write off the cost of new, depreciable assets like manufacturing equipment or light trucks: the Section 179 deduction and the 50% first-year bonus depreciation provision. But many don't know that they may also be eligible for a state manufacturing credit. In New York, California and Illinois, for instance, companies that purchase qualified machinery or other equipment used in manufacturing may receive a credit against the cost of that new equipment. “It usually amounts to some percentage of the purchased equipment,” says Rothstein. Also, in New York, business owners whose companies didn’t earn profits can use this credit to offset the business' net worth or capital taxes, he says.

Research and Development Credits (Federal, State)

Many businesses take advantage of the research and development tax credit, which refunds 20% of expenses associated with research projects. (President Obama is proposing that this credit, which needs to be renewed periodically, be made permanent). But what many don’t know is that they can qualify for a research and development credit on the state level as well.

States including Ohio, New Jersey, Pennsylvania and California all offer their own brand of research and development credits. In California, for example, if you paid or incurred qualified research expenses while in the state, you’ll receive a credit that’s worth 15% of those expenses.

Another R&D benefit? Biotech companies in New Jersey and Pennsylvania are allowed to sell their research and development credits, says Myron Vansickel, global director of the state and local tax center at Jefferson Wells, an accounting firm in Milwaukee.

Property Taxes (Local)

Like many residential home values these days, commercial property values have also plummeted. To avoid overpaying real estate taxes, get an appraisal of your property to verify that it is now worth less. You can also check out how much similar properties in the area are fetching, too, says Curran. Then file an appeal with your local assessor’s office.

Sales and Use Tax Exemptions (State)

Before you buy anything for your business, check for sales tax exemptions in your state. In Virginia, for example, information technology firms can purchase computer hardware sales-tax free, says Vansickel. In Illinois, manufacturers can avoid owing sales tax on manufacturing equipment. And in Massachusetts, there’s a sales tax exemption for equipment used in research and development, says Curran. To see what kinds of exemptions you qualify for, head to your state’s department of taxation web site or business development center.

Unemployment Tax (State)

Want to reduce your company’s unemployment tax? Then do your best to retain workers. According to Vansickel, a small company can save between $25,000 and $300,000 a year by managing its unemployment claims. State revenue departments track how many unemployment claims workers log against your company from year to year. So if you had 100 employees at the beginning of the year and only have 50 by the end of it, then you hire 50 more workers the next year, you’ll be paying twice as much in unemployment tax for the following two to three years, he says.

 

Corrected April 10, 2009. In our initial version of this story we incorrectly stated that business owners in New York could use a manufacturing credit to offset their personal net worth if their company is unprofitable. In fact, they can use it to offset the net worth of the business.

-Write to Diana Ransom at dransom@smartmoney.com

Other recent smSmallBiz stories:

• The Man Behind a Meat Craze
• Stand Out: Redesigning the Web for Today's Consumer