In an attempt to spur the growth of small businesses, the state of Ohio will offer a 10 percent tax credit on qualifying investments in recognized small businesses. The InvestOhio credit is worth up to $1 million, and state officials believe the program will generate at least $1 billion in new private investment.
Investors who wish to claim the credit and small businesses that wish to benefit from the investments must first register with the Ohio Business Gateway. Investors and small businesses that are accepted into the InvestOhio program can begin applying for the credit in early December.
Only individuals and pass-through entities are eligible to claim the credit, which will be a dollar-for-dollar reduction in Ohio income tax and can be carried forward for up to seven years. A C-Corporation that wishes to invest in a small business might consider establishing a new legal entity that would be eligible for the credit.
In order to qualify as an Ohio small business, a business must have less than $50 million in assets or $10 million in annual sales. Plus, at least 50 employees or 50 percent of the business’s total employee population must be based in Ohio.
The small business must reinvest that capital within six months of the qualifying investment, and the investor must hold his or her ownership interest in the small business for at least two years. The Ohio Department of Development is authorized to issue up to $100 million worth of credits through June 30, 2013.
For more information on the InvestOhio program, or to discuss other tax-planning ideas, contact me or your Barnes Dennig tax representative.