Get Proactive: 6 Steps to Help Clients Maximize State and Local Incentives

IMGCAP(1)]How often do you read headlines in the local business journal about companies receiving state and local incentives to expand or relocate? Are your clients in the headlines for incentive deals? If not, you may be able to help them get there—and create a lot of value and goodwill in the process.

Growing companies create jobs, bring income into the area, train skilled workforces and produce tax revenues for state and local governments. When companies look to expand operations, make capital investment or add new jobs, state and local economic development teams have a variety of discretionary incentives at their disposal to help them attract and retain business. These include time sensitive discretionary incentives, including tax abatements, payroll tax credits, infrastructure grants, lower- or no-interest loans, training grants and tax increment financing. Every state and location is different in what they can provide and how aggressively they use incentives to attract and retain business.

Why Is Incentive Planning Important?
In the right situations, incentives can be an important factor in location decisions and bring hundreds of thousands or even millions of dollars into a business. Whether a company is relocating or simply looking to expand, there may be valuable state and local incentive opportunities.

Still, most companies fail to capitalize on opportunities. Why? Primarily because, unlike most areas of federal and state tax, most incentives must be negotiated in advance. Incentive programs are meant to provide motivation for companies to choose specific locations and positively impact local economies through job creation, training and investment. Coming in after you’ve done something and reporting it won’t get you much. That’s why it is critical for advisors to understand not only what their clients have done, but also what they are planning to do. Hundreds of thousands or even millions of dollars could be at stake.

To maximize incentive opportunities, companies need to understand what incentives are available, when to pursue them and how to manage the process. The best way to ensure your clients are prepared for the opportunity is to educate them and help them create an incentive plan.

Six Steps to Delivering Incentive Value
From Fortune 500 companies to closely held businesses to venture capital-backed startups, state and local governments are actively incentivizing businesses. Follow these six steps, and you will be well positioned to help your clients identify and pursue incentive opportunities as they are presented.

1. Develop or Partner with Expertise: Negotiating discretionary incentives and advising on location decisions takes experience and expertise. You will need knowledgeable, skilled professionals to identify opportunity and maximize value. There is a lot of potential value available, for both your firm and clients if you can deliver the right service.

2. Educate Your Team and Your Clients: Local and state incentive opportunities vary widely from city to city, county to county and state to state. Your clients’ opportunities will be driven by programs, locations and the specifics of their growth, expansion and investment plans.

3. Discuss Growth and Investment Plans: Once you know the programs, you also need to know what your clients are planning. Facility needs, equipment purchases, job creation, training and other capex can all drive incentive opportunities. With an understanding of incentive programs, location alternatives and growth plans, a skilled advisor will be able to identify when and how to pursue incentives.

4. Identify Opportunities and Triggers: In order to capitalize on incentives, you and your clients need to know how to recognize opportunities. Develop and distribute a list of key triggers that may indicate opportunity. These include relocations, expansions, significant capital expenditures, employee increases and more.

5. Keep Asking the Right Questions: If you evaluate incentive opportunities at one moment in time, you may not find opportunity. As future plans change, so will opportunities for incentives. Once you know the right questions to ask, try fitting them into your existing planning discussions with clients. An extra question or two during annual tax planning could uncover unseen opportunity.

6. Be Ready to Act: If your firm has a site selection and incentives practice, you’re all set. You will just need to walk down the hall when you see opportunity and get your team working. If you don’t, consider finding a trusted partner that does. Being able to deliver this service to your clients will help you demonstrate value and set you apart in your market.

Growing companies are benefiting from incentives in cities and states across the country. If your clients aren’t benefiting, they may be at a disadvantage versus their competition. In the world of consulting and accounting, where there is value, there is opportunity—and there is a lot of value in economic incentives.

Steve Brunson is a principal in the Site Selection and Economic Incentives Practice at McGuire Sponsel. Steve brings insight and value through site identification, comparative analysis, demographic and labor force analyses, tax and non-tax cost comparisons and economic incentives negotiation and procurement. He can be reached at or (317) 564-5015.

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