Growth can be great for your business. Luckily, the federal government as well as state and local governments are seeking to stimulate business and employment growth within their borders, and many of them offer tax credits and incentives to help achieve this result. The challenge for many businesses is in understanding the credits for which you may be eligible as you expand into new jurisdictions, add employees, train your staff and build new facilities. Then you must collect the appropriate data and report it in the form and timeframes required in order to claim the credits.
Different tax jurisdictions offer widely differing tax credits, some targeted to certain industries or categories of employees like veterans or disabled people, according to Urban Institute. Set yourself up to take full advantage of credits for which you may be eligible. Here are a few credits you don't want to miss out on.
State Credits: New York and Arizona
Did you know that New York state will give you a $10,000 tax credit for training your employees, and will pay half the cost if you hire a paid intern (capping at $3,000 for the credit)? New York's Employee Training Incentive Program is just one of many tax credits the state offers to businesses in their jurisdiction. New York also offers an Excelsior Jobs Program that allows your business to capture a tax credit of 6.85 percent on the wages of every new job you create in the state.
Further west, Arizona has a Quality Jobs tax credit that allows you to take a $9,000 tax credit over three years for creating a new employment position. The state also offers you a grant to pay 75 percent of the training costs for an eligible employee, according to the Arizona Commerce Authority.
There are thousands of credits like those listed above and some can be worth thousands of dollars per eligible employee. So it's critical your organization understands how best to take advantage.
Don't Miss Out
Tax credits have detailed eligibility requirements, reporting requirements and filing deadlines you must follow. It can be a major challenge to keep updated on all the changes happening in all these tax jurisdictions. How can you ensure that you're not losing out on generous credits for which you may be eligible?
Applying for Tax Credits
The key is having the capacity to identify the credits for which you may be eligible for in the tax jurisidiction where you do business. This takes expertise in understanding what the credits are, whether you're eligible and how to apply. You also need the capability to access and aggregate employee data that may be needed for the application and ongoing reporting process. Finally, you'll need to do this in a timely and cost-efficient manner.
If you invest $3,000 in resources on a credit worth $3,000, then you're not coming out ahead. In fact, you may be better off spending that limited time and money on something else. Here's what can help you capture every tax credit available to you.
1. Work With a Trusted Partner
This way, you can simply tell your trusted vendor about your expansion plans and ask them to help you identify and capture any relevant credits. Vendors often have forward-thinking, dedicated experts who work exclusively on tax credit and similar programs.
2. Use Automated Systems
Having the ability to quickly collect, process and aggregate data has never been more important than when it comes to regulatory compliance across jurisdictions, and the same holds true for capturing tax credits. Automation can allow you to move faster and cheaper to meet filing deadlines.
3. Integrate Your Applicant Tracking and other HCM Systems
Depending on the specific tax credit you seek to capture, you may need to access an array of divergent data, so having an HCM system that pulls data from your existing applicant tracking, payroll, HR and financial systems can be a major success tool. When you have the right system integrations in place, you can be the master of your data, no matter how fast regulations change.
As a finance leader, you never want to leave money on the table. Taking advantage of tax credits you're eligible for, and in a cost-efficient way, is critical as your organization expands into new jurisdictions.
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