Is your business as profitable as it should be? Before you answer that, consider whether you are taking advantage of all economic development incentives your state has to offer. Even before the current economic downturn, most states offered some form of incentive for businesses that either located or expanded within their borders. Unfortunately, these incentives are not well publicized and, therefore, many businesses leave money on the table.
To begin with, not all credits/incentives are alike. Let’s take a look at some of the more generic types:
Capital Investment tax credits reward a company for plant expansions. These can take the form of annual additions in the normal course of business or credits for major plant additions. For example, a state wishing to encourage manufacturers to update facilities may offer an annual property tax break for plant upgrades.
Export incentives may be employed by states seeking to stimulate jobs related to products shipped outside the United States.
Historic Rehabilitation credits are often used in urban areas to keep the historic nature of an area intact. In exchange for rehabilitating an historic structure, which often costs more than demolishing and rebuilding it, a business would receive tax credits to help recover costs more quickly.
Jobs Creation credits are perhaps the most critical to the citizens of a state and often are tied in with other credits, like capital investment, motion picture and research credits.
Motion Picture credits have become increasingly popular with states following successful application in Louisiana and other states. Designed to spur local spending by motion picture producers, these credits also provide a major source of funding for the films themselves.
Training incentives that help you build a well trained workforce provide you with a funding source to educate your current and prospective employees. When you consider the high cost of training, these incentives can be a boon for your business.
The foregoing are just a few of the many types of business incentives states offer and it is important to note that the incentives are not limited merely to taxes. Training incentives, for example, are often cash reimbursements of direct costs. Low interest financing is another type of non-tax assistance.
Taken together, state business incentives can save hundreds and thousands of dollars for a typical business, but as we said, it is sometimes difficult to find what incentives are offered in a particular state. How, then, do you get the information you need? There are a number of possibilities, depending on your level of patience.
Of course, you can always contact your local chamber of commerce. Chambers of commerce are in the business of economic development and often are either aware of programs in your state and local government, or have the contacts to locate information you need.
A quick internet search can also help. For example, a search in Google for “Iowa economic development” produces a great list of possible sources of information. You can also go to a state’s web site for information. State web sites are generally accessible by typing in your browser www.nameofstate.gov. For example, Alaska’s web site is www.alaska.gov.
There are numerous firms that specialize in helping companies find suitable business incentives. Although the fees paid to these firms may be ultimately worth the cost, the services are not inexpensive.
Finally, several companies collect and publish information on available credits. These state by state compilations are great sources of information that are constantly updated. However, services like these are not inexpensive and may be ‘over the top’ if you are looking only for incentives in your state.
A good research strategy would be to first look at your state’s economic development web site and follow that up with a call to your local chamber of commerce.
States offer billions of dollars in business incentives each year to either lure companies to the state or retain current businesses. If you are thinking of expanding your business or simply want to know if your state has incentives you can tap into, give us a call. We will be happy to assist you in maximizing your profits.
Have a happy Memorial Day.