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episode 68 – keep your money: count every credit & employ every incentive
Wondering how to make filing your taxes as pain free as humanly possible? State and local tax guru Chad Bice, CPA, a principal in Rea’s Zanesville office, may have the answer. On this episode of unsuitable on Rea Radio, Chad shares some valuable insight: tax credits and incentives aren’t just for the giant corporations. Small- to mid-sized businesses can benefit from a variety of valuable credits and incentives as well. In short, if you can produce headcount growth, new tax dollars to the state, new investment in fixed assets or new investment in training your employees, then there are credits and incentives you can (and should) be taking advantage of.
According to Chad, the most often phase you will hear with regard to state and local taxation is: “it depends.” That’s because there are a variety of other outliers to consider before arriving at a concrete answer. Ultimately, state and local tax answers depend on the:
- Facts surrounding your business
- State in which you are doing business
- Local jurisdiction in which your business is located
Statutory Credits and Negotiated Incentives Provide Tax Relief
All business owners should be acutely aware of the statutory credits and negotiated incentives available to them. Think of statutory credits as things frequently claimed on your tax return, including investments in machinery, equipment, furniture, fixtures, research & development, hiring, etc. These are credits can often be taken after the fact.
Negotiated incentives, on the other hand, include training grants, hiring grants, job credits, real estate abatements, tax increment financing, etc. These incentives must be negotiated before the fact. Here are some other key facts regarding negotiated incentives:
- You can never start too early, but you can start too late. If you wait, the money may be gone or you may no longer be eligible. Furthermore, if you’ve already started the project, ordered the machinery, or hired the employee then it’s too late. No one is going to offer you a credit or incentive if you’ve already committed to making that investment.
- Credits and incentives should be tied into your long-term strategic plan. Chad says he tries to create a three-year picture of incentives for his clients annually. To do this, he asks for a three-year picture of payroll increases and headcount increases as well as a three-year projection of fixed asset spending and training spending. Remember: Jobs are king. There are tremendous opportunities for incentives when it comes to headcount increases.
- Get to know the economic development directors in your area. Negotiated credits and incentives often involve three to four parties: the city, the county, the township or the state development authorities.
- Planning to move your business or expand? There may be incentives or credits for moving to another region, moving to another state or expanding in your existing location.
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articles & insight
Local Taxes Apply To All Taxable Income – Finding yourself on the receiving end of some unexpected income can feel pretty good. Just remember that, oftentimes, unexpected windfalls are accompanied by unexpected financial responsibilities. Read on to learn more.
Research & Development Credit Benefits Businesses Of All Sizes – If you own a small-to-midsize company, you probably haven’t given much thought to how the Research & Development (R&D) tax credit could help you. You might even think that the R&D credit is reserved for big businesses with tons of money to spare on technological investments. If so, then you may want to change your thought process and your business strategy. Keep reading to find out more.
Bonus Depreciation Yields Big Savings For Business Owners – Since introduced as part of the Job Creation and Worker Assistance Act of 2002, bonus depreciation continues to be a powerful tool for year-end business tax planning. Keep reading to discover just how powerful.
Taking On Taxes – Year Round – If you’re like most people, you may tend to view taxes as a necessary evil that you have to deal with only one time each year. The truth is, taxes should be part of your discussions year-round. Read on to learn more.
Attract Top Talent With These Tax-Free Tactics – When it comes to attracting and retaining the top talent in your industry, businesses seem to have no choice but to get creative with their benefit packages. The good news is that many employee perks are tax-free. Read on to learn more.
Is Your Business A Family Affair? – The family that’s invested in the success of the business, and is willing to roll up their sleeves and get to work, may be able to secure some significant tax savings. Keep reading to learn more.
Environmentally Friendly Tax Savings – For business owners, going green can result in significant tax savings as well, which can make environmental responsibility that much more desirable. Read on to learn more.
Click here to read the official transcript for episode 68: “keep your money: count every credit & employ every incentive.”