If you had a chance to claim thousands of dollars, would you? Well, if you are a business owner, the opportunity is staring you right in the face. But you have to seize the opportunity sooner rather than later.
Right now, there are around 3,000 federal, state and local credits and incentives valued at more than $50 billion available to your business. These opportunities are both statutory and negotiated and include hiring credits, investment credits, real and personal property incentives, utility rate reductions and infrastructure grants – just to name a few. Unfortunately, only a relatively small number of companies are taking advantage of these opportunities.
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So why aren’t businesses seizing these opportunities for cash flow enhancement and return on investment? Sometimes companies don’t know they exist, or they think that they are too complex to understand and the opportunities are not worth the effort. Wrong!
If you take the time to develop a credits and incentives plan, your company can capture a piece of the $50 billion pie. Here’s how!
Key Elements of a Tax Credits and Incentives Plan
- Outline your key opportunity indicators. Key opportunity indicators are events that your team should come to know and understand that trigger the potential for credits and incentives. They typically revolve around your people and your investment in fixed assets. On the people side, opportunity indicators often involve increases or decreases in employment, turnover, relocations and employee training or retraining. On the fixed asset side, opportunity indicators include site selection and start-up, capital investment, leases and renewals, building acquisitions, facility upgrades and so on. Make a list of these indicators and train your team to spot them. Once an opportunity is spotted, investigate further and contact your CPA to see if it might benefit your business.
- Understand that timing is everything. To give your business the best chance of securing a credit or incentive, you must understand that timing is everything. To secure many credits and incentives, the process of securing the opportunity happens well in advance of hiring, training or purchasing fixed assets. In many instances, if your business has hired the employee, spent money on the training or purchased the fixed asset — it is too late. Once you’ve spent the money or announced your plans to the public, you’ve lost most if not all of your ability to negotiate. Understanding this and putting a plan in place to uncover the opportunity well in advance of the investment will put you in a position for maximum success. And outlining your key opportunity indicators is the first step to realizing the potential credits and incentives available to you.
- Get your entire team on board. Securing maximum credit and incentive opportunities isn’t just the job of your owner, CFO or CPA. It should also be the job of your HR department, training coordinator and safety director. The more your entire team is able to understand the key opportunity indicators and that timing is everything, the greater chance of success you will have.
Tax Credit Help
If you’re looking to capitalize on these credits and incentives opportunities and would like to learn more, email Rea & Associates. The sooner you move on this, the faster you’ll be able to realize the benefits.
By Chad Bice, CPA (Zanesville office)