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Tax Incentives for Companies from Local and State Government

Many local and state governments are trying to entice companies to invest their time, money and business resources in them. To accomplish this goal, local and state governments are offering tax incentives for business. By taking advantage of these incentives, companies can maximize their return on investment and help fund many capital improvement projects. Corporations need to keep in mind three simple steps when planning for capital improvement projects.

Gather Relevant Data

In many corporations, especially large companies, the board or CEOs will plan for capital improvements for the company. While these sounds like a good plan, there is a problem with this way of planning because corporations could evaluate projects based on tax incentives available. Planning should take place with the knowledge of what tax incentives government entities are providing.

Redefine Projects

Many times, the ways companies define capital improvement projects and the way the government entities define “projects” are two different things. Companies need to change their definition to fit the government’s definition so they qualify for the tax incentives. This will maximize the amount of incentives the company qualifies for and will supplement the money spent on capital improvements. Keep track of the requirements for the tax incentives. If the tax incentive requires a three-year window to complete the project, submit a timeline to track the progress. Follow the rules and regulation to the letter.

Let the Race Begin

It is important to realize that there are going to be other companies competing for the tax incentives. Competition is good, but keep your eyes on the prize. Contact the government entity early in the process and keep them updated. Have several different presentations, even if they do not all come into existence. The process can be compared to an auction, and the person with the “last-best” bid will with the prize of the tax incentive. During this negation time, keep a tight control on internal and external communications. Do not let a loose tongue be the downfall of any new project. Discretions is best.

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