Smart Startups Can Get Massive Tax breaks Building or Relocating Near NY State CampusesDecember 4, 2013
Smart Startups -- and Employees -- Can Get Massive Tax Breaks If They Build or Relocate Businesses Near New York State Campuses
Revolutionary Program Gives 10-Year Tax-Free Window -- Unprecedented Opportunity, but Complex Rules, Says New York Accounting Firm Marks Paneth
NEW YORK, NY--(Marketwired - December 04, 2013) -
Smart startups and their employees can take advantage of massive tax breaks this year, thanks to a groundbreaking program that rewards businesses for locating near university campuses in New York State.
The just-launched START-UP NY program creates tax-free zones for businesses that set up or move into newly established tax-free zones, mostly in upstate New York. The zones will be located near campuses of the State University of New York (SUNY), the City University of New York (CUNY), and certain private colleges and universities. Tax benefits go into effect on January 1, 2014.
"START-UP NY is one of the most innovative programs in the U.S. for business incubation and job creation. It's far-reaching and groundbreaking," says Steven P. Bryde, JD, Principal in the Tax Practice of Marks Paneth. (Marks Paneth has no official connection to START-UP NY.)
"But qualification standards are strict and the application process is complex," Mr. Bryde says. "Business leaders and employees need to explore the program now and act quickly if they're going to be able to take advantage of the major tax breaks that are available for the 2014 tax year."
START-UP NY is Far-Reaching and Aims for Long-Term Impact
The purpose of START-UP NY is to create jobs and to establish economic development zones that benefit businesses in the long term, as well as benefitting communities, Mr. Bryde says. "It goes far beyond the usual project that seeks to get businesses to move into depressed areas. Its aim is to create economically viable relationships so that the development zones survive long term and have a lasting impact."
Among the details of the program:
- Major tax breaks are available for both businesses and employees: START-UP NY provides eligible businesses an exemption from all business, real property and sales taxes for a 10 year period following their location in a tax-free zone. The business owners and employees of the entity are exempt from New York State personal income tax on their earnings for the first five years after locating in such a zone. The first $200,000 of income earned in each of years six through 10 will also be exempt from personal income tax. This personal income tax exemption is limited to 10,000 new jobs per year created under the START-UP NY program.
- Standards are strict and the business must be related to on-campus programs: To qualify, the business must be a startup or an expanding business that is creating new jobs. It can be New York-based or an out-of-state company relocating to New York State. Its products or services must be connected to the academic offerings of the nearby campus. It does not have to do business directly with the college or university -- but its business must be related. "If your business offers consulting services related to research and development, and the campus has a research and development capability, there's a good chance you will qualify," Mr. Bryde says. "But a Starbucks located near a campus will have to pay full taxes."
- There is a complex, two-part application process: Applications are submitted directly to the college or university -- but once the university accepts it, the Board of Empire State Development (ESD) reviews the application and gives final sign-off within 60 days. "It's a two-step process -- first the university, then the board. ESD has ultimate oversight over the whole program -- it approves the universities' applications to create tax-free zones, and in addition, it has the last word on whether a business qualifies," Mr. Bryde says.
- Many locations are available: The areas covered include areas surrounding SUNY's 64 campuses, New York City's CUNY campuses, certain private college and university campuses and certain State-owned lands.
Smart Business Leaders Should Act Now to Take Advantage of 2014 Tax Benefits
"Businesses that want to take advantage of the program can -- and should -- act now," Mr. Bryde says. "Although the tax benefits aren't in effect until January 1, the application process can start now -- and you can make your strategy part of your 2014 tax planning."
"Your first step should be a conversation with the board. They're able and willing to give oral advice about such matters as the application process, and also which campuses have offerings that are related to your business. Remember, your offering must be connected to the specific campus where you set up shop, not to the university system in general," Mr. Bryde says.
"Once your board representative advises you, you've determined the tax advantages and have decided to relocate, that's when you get in touch with the university or college and begin the formal application process."
Mr. Bryde is available for interviews and can author bylined articles. For more information or to schedule a conversation, contact Katarina Wenk-Bodenmiller of Sommerfield Communications at (212) 255-8386 or email@example.com.
About Marks Paneth
Marks Paneth LLP is an accounting firm with over 500 people, of whom nearly 65 are partners and principals. The firm provides public and private businesses with a full range of auditing, accounting, tax, consulting, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services, and energy clients. The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle.
The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in Morison International, a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth, whose origins date back to 1907, is the 34th largest accounting firm in the nation and the 16th largest in the New York area. In addition, readers of the New York Law Journal rank Marks Paneth as one of the area's top forensic accounting firms for the fourth year in a row.
Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit www.markspaneth.com.
Sommerfield Communications, Inc.