By Nick Hopkins, CPA, CFP®
Partner, Director of Tax Services
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~and~
Ben Worrell, MBA
Principal, Location Advisory Services
McGuire Sponsel
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As you continue to build your business and grow your support system, don’t forget what you could gain from state and local governments.
Governments offer incentives in the interest of attracting new businesses, retaining existing businesses and discovering new investment opportunities to create jobs, promote economic growth and help maintain a state or local community’s economic vitality and quality of life. Additionally, the resulting economic activity helps maintain governmental tax revenues used to support schools, infrastructure and community resources.
Incentives are customized according to the needs of each business. They can include tax abatements, payroll tax credits, infrastructure grants, lower interest loans, relocation or training grants, special lease or construction terms and tax refund credits.
Does your business have the potential to receive incentives and credits? It might if you’re considering the following:
Adding jobs: Governments see this as a benefit to the communities they serve since it could increase local residents’ income along with consumption in the local economy.
Relocating: Whenever a new business considers establishing in a community, it suggests the potential for many opportunities: new jobs, new products and services, new community outreach efforts, the list goes on.
Owning the business as a local resident: In addition to hiring nearby residents to make up their staff, locally-owned companies are more likely to use local suppliers, thus making a bigger economic impact and being more valuable to local government.
Investing in research and development: Businesses that invest — particularly in technology, pharmaceuticals, biotechnology and aerospace — often qualify for tax credits to incentivize innovation, which makes a broader impact and thus may catch the attention of the federal government.
Going green: If your business is implementing sustainability initiatives or employing clean technology and renewable resources, you could stand to benefit from tax credits or grants aimed at supporting environmentally friendly business practices. And if sustainability isn’t one of your focuses, you should consider it as an avenue for receiving economic incentives.
Navigating through the maze of potential economic incentives available can be tricky, and timing is important. When should your business explore incentives? The best time is prior to hiring new employees, making capital investment or signing lease/purchase agreements.
Our teams at Sponsel CPA Group and McGuire Sponsel can work in conjunction on your behalf with state and local officials to identify, negotiate and procure incentives for your company. McGuire Sponsel’s Location Advisory Services team uses a proven process to highlight project fact patterns and propose financial incentive solutions that align with both a company and its surrounding community’s values.
We can guide you through the process of applying for incentives and credits. Each incentive varies depending on the particular government incentive program and the company’s specific projects. Incentives usually require a minimum investment amount, number of jobs added, etc. Businesses are typically paid out between three and 10 years.
The incentive landscape is complex and constantly changing, which is why it is shrewd to have knowledgeable advisors — including attorneys, CPAs, bankers and brokers — on your consulting team.
For more information about how Sponsel CPA Group and McGuire Sponsel can assist you with incentives, please call Nick Hopkins at 317-608-6699 or email him here; or call Ben Worrell at 317-562-0407 or email him here.