Planning For Expansion or Relocation in 2019?

Posted: Updated:

Given the strength of today’s economy, business relocations and expansions that were once few and far between are now much more common. Businesses considering significant investments or relocations in 2019 will consider the cost and availability of workforce, logistics, cost of short- and long-term occupancy, and much more when looking for the ideal project site. There needs to be a good community fit as well.

While these are all critically important factors to the success of a potential expansion or relocation project, in 2019, workforce will likely be the driving factor in many location decisions.

The biggest challenge in prioritizing workforce cost and availability is that the right workforce dynamics can be quite elusive. What appears to be the right decision today may look like the wrong decision down the line.

As workforce realities change, what remains constant is that companies with healthy after-tax profit margins are the most capable of adjusting, surviving and thriving in any labor dynamic. Healthy margins and cash flow ensure that rising wages will not cripple a business.

Credit and incentive opportunities provide a tremendous advantage in this area and not just for large corporations.

With stark differences in taxes between both states and municipalities, the location of your business can make a tremendous difference to your bottom line and your ability to compete for labor in 2019.

Given the right situation and an attractive regulatory environment, many taxes can be reduced, deferred or even used to fund a project. These extra dollars can be reinvested in machinery, equipment, technology and workforce to ensure the future viability of your operation.

Regardless of what is driving your location decision in 2019, future profit and cash flow will allow you to weather any unforeseen challenges. For this reason, incentives deserve consideration throughout your location evaluation process.

Before you consult a professional for incentive assistance – highly recommend in order to maximize your investment – it’s helpful to have an understanding of possibilities.

What are credits and incentives?

Credits and incentives include both statutory and discretionary incentives that municipalities and states can provide to entice businesses and desirable economic activity. Common incentives are investment tax credits, job creation tax credits, training grants, real and personal property tax abatements, tax increment (TIF) financing and revenue bonds.

Incentives help even the playing field between locations and, in ideal circumstances, help businesses to reduce tax liabilities, increase cash flows, train and maintain a workforce, and as previously stated, even finance projects.

Add these all together, and you have a tremendous amount of value available to growing businesses—value that state and local governments want to deliver to support job creation and economic expansion in their areas.

In fact, you’re likely reading expansion, jobs and incentive announcements on a weekly basis just on this website. Businesses are being courted and incentivized to expand all around you.

A tool for companies large and small.

Fortune 500 companies often require cities and states to provide massive incentive packages as a part of strategic plan to minimize state and local taxes and keep more money in the company. Amazon HQ2 is only the latest example. But can closely held businesses do the same?

Many can, but few do.

A common misconception is that incentives are only available for large companies looking at new locations and large capital expenditures. However, the reality is that growing businesses of all sizes bring value to their communities, and economic development officials have plenty of incentives to motivate closely held businesses to expand and invest in their communities.

Traditionally, CPAs do not actively work with clients to negotiate and procure state and local incentives. These incentives don’t work like federal tax incentives, and so the mechanisms of benefit and process to obtain the credits are fundamentally different.

Additionally, discretionary state and local incentives vary greatly from city to city, county to county and state to state. Incentives also tend to change significantly over time. If you aren’t aware and taking advantage of these opportunities, you’re losing real money.

Timing is everything.

Most state and local incentives must be negotiated before expansion plans are announced, leases are signed or purchases are made.

Unlike many federal tax incentives, which can be documented and claimed after the fact, local incentives are typically discretionary and awards are negotiated. Growing businesses must understand available incentives and pursue them at the right time.

On a daily basis, you’re thinking or speaking about where your business is and what it needs to thrive in the future. Taking a proactive approach to economic incentives is low-hanging fruit you that can save your company thousands, hundreds of thousands or even millions of dollars.

Maximize your investment, and ensure your next expansion comes even sooner. 

Steve Brunson is a principal at Indianapolis-based McGuire Sponsel.

  • Perspectives

    • (photo courtesy of Conexus)

      October Celebrates Indiana’s Vibrant Manufacturing Industry

      Indiana is the most manufacturing intensive state in the country and more than a third of the state’s GDP comes from the industry. The health and wellness of Indiana’s economy is dependent on the state’s manufacturing industry. But Hoosiers face a challenge: it is expected that nearly a quarter of the current manufacturing workforce will be of retirement age in the next 10 years and we lack the generational workforce to make up that gap.

    More

Subscribe

Name:
Company Name:
Email:
Confirm Email:
HTML
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections
INPower
Subscribe
Unsubscribe

Events



  • Most Popular Stories

    • Regal Beloit is closing in Valparaiso. (photo courtesy; The Times of Northwest Indiana)

      Valpo Bearings Plant to Close, Eliminating 160+ Jobs

      Wisconsin-based Regal Beloit Corp. and the union representing workers have reached an agreement about the closing of a helicopter bearing factory in Valparaiso. According to our partners at The Times of Northwest Indiana, the decision will cost between 160 to 170 workers their jobs. 

    • (image courtesy of The Times of Northwest Indiana)

      U.S. Steel Updates Layoff Notice to State

      Pittsburgh-based U.S. Steel Corp. (NYSE: X) has updated the State of Indiana regarding its previously announced layoffs at the East Chicago Tin Mill. The company says 314, rather than 307, workers will be displaced when the mill is idled this fall. 

    • The Columbian Home Products plant was built in Terre Haute in 1902.

      Kitchenware Maker to Close in Terre Haute

      Illinois-based Columbian Home Products LLC has sent a letter to the State of Indiana saying it intends to close its plant in Terre Haute and lay off 82 workers. According to the WARN letter sent to the Indiana Department of Workforce Development, the layoffs will begin on December 1. 

    • The Lawn at White River State Park currently hosts concerts, but is not a permanent venue. (photo courtesy White River State Park)

      White River Park to Break Ground on Permanent Venue

      White River State Park in Indianapolis will Wednesday host a ground-breaking ceremony for a permanent concert venue on its concert lawn. The project, announced early last year, will include a permanent st...

    • Ingram Micro has more than 170 facilities throughout the world.

      Ingram Micro to Make Announcement

      Officials in Plainfield are set to make another economic development announcement Wednesday morning. Few details are available, however the Indiana Economic Development Corp. says executives from California-based Ingram Micro will take part in the announcement.