CPA & Business Advisory Blog

Investment Support for Ohio Manufacturers

Part 5 of Jim Sacher’s 12 Great Ideas for Tax Savings series  – Guest author Jon Shoop

With the economy on the upswing, many Ohio manufacturers are considering opportunities to grow their businesses and increase staff size. Ohio’s Development Services Agency made it easier on these manufacturers to grow by developing the InvestOhio program, creating a tax credit that provides investors support for their investment.

What to Look ForInvestOhio

If you are considering one of the following actions this year, you may qualify for the InvestOhio tax credit program:

  • Purchases of fixed asset
  • Hiring of new employees
  • Expanding your business

The Opportunity

If you meet one of these conditions, then consider InvestOhio, a state of Ohio program that can provide up to a 10% income tax credit, based on the amount of equity invested. Act soon – the program is set to expire June 30.

The requirements to qualify for the InvestOhio tax credit include:

  1. The small business is required to invest new equity into the business and spend it on one of five categories of allowable expenses within six months of its receipt.
    1. Tangible Personal Property, excluding personal use vehicles, used by the small business
    2. Motor vehicles registered in Ohio and used primarily for business purposes by the small business
    3. Real property located in the state used in the small business
    4. Intangible personal property (i.e., trademarks, patents, licenses, etc.) used by the small business
    5. Compensation for new employees subject to Ohio withholding tax
  1. The investor must retain his or her equity contribution in the business for a two-year holding period before the tax credit may be claimed
  1. The small business must similarly retain the property that it purchased from the cash infusion for the entire two-year holding period

The Benefit

The InvestOhio tax credit provides a 10% non-refundable personal income tax credit of up to $1 million to offset Ohio income taxes for investors who put new equity (cash) into Ohio small businesses which is used for the purposes above.  The credit is available five years after the investment is made.

As a bonus, even investments in the recent past may still qualify, so if you’ve made equity contributions to a business which was then used for the qualifying purposes you may still apply for the InvestOhio credit.

Again, be sure to act fast if you are eligible for InvestOhio – it is scheduled to expire June 30. If you have questions about the InvestOhio tax credit, please contact Jon Shoop at 440-605-7107 or jshoop@skodaminotti.com.

Stay tuned for the next article in our series on creating an Interest Charge (IC) Domestic International Sales Corporation (DISC). For questions on how you can take advantage of any of these tax savings ideas, please contact Jim Sacher at 440-605-7145 or jsacher@skodaminotti.com.


12 Great Ideas for Tax Savings

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