Posted by Jeffrey Feingold on 03.03.15
Proposed R&D bill aims to aid startups in New Hampshire.
By AMANDA BELAND
New Hampshire Union Leader
Click here to see the original article.
A Senate bill currently in discussion would offer startups doing research and development the option to take advantage of a tax credit program through a partial rebate before they become profitable and owe any taxes.
SB 215-FN-A would allow businesses to choose to receive a rebate on their research and development tax credit instead of having that credit be used as an offset of their business profits tax liability. The rebate would be for up to 65 percent of the tax credit offered to the business.
As it stands now, businesses eligible for an R&D tax credit can only benefit from the credit if they’re making a profit. Many startups, especially within the first few years of their existence, can’t take advantage of the credit and the access to capital it affords.
The program would be a win for startups in the state, said Michelline Dufort, with the New Hampshire High Technology Council and Cookson Strategies.
“We did testify in support of this bill because the New Hampshire Tech Council is supportive of any measure that gives startups room to raise the capital they need in whatever means that may be,” Dufort said.
The life cycle of a startup can be “fast and furious,” she said.
“Some startups have great ideas, and they know how to bring a concept to market, but they don’t have capital,” Dufort said. “Just having another avenue on the table to give them access to funds to use is important.”(Liz Gray, the state’s first director of entrepreneurship, wrote about the bill in a column that appears on this page.)
“For early stage companies, having cash up front that they can reinvest in their company is often more beneficial to their growth and success than receiving a tax credit that they may be able to utilize in future years when they are profitable,” Gray wrote.
The state’s R&D tax credit program is similar to the federal program where funds are given to a business to help with R&D costs.
Janice Leahy-Daniels, founder and CEO of Manchester-based OIKOS Software — a cloud-based finance platform — said a lot of research and development costs come up within the first couple years of a startup’s founding. Generally, in these first couple of years, a business is trying to break even while also looking to further develop their company.
Leahy-Daniels wrote a letter to the New Hampshire Senate Ways and Means Committee — where the bill is currently in discussion — in support of the bill.
“This type of program, in my opinion, has tremendous upside for small businesses and the state of New Hampshire,” Leahy-Daniels wrote in the letter. “Small business opts for the rebate, receives a much needed working capital injection, and regenerates this cash back into its business for further R&D activities.”
Leahy-Daniels first became aware of this type of program last summer when she learned of a similar rebate program in Connecticut, which is the only state in the surrounding New England area with a R&D rebate program. Leahy-Daniels said if New Hampshire were to implement the rebate program, possible business from surrounding states — particularly from Massachusetts — could increase in the Granite State.
“I see really good things happening if the state passes this and pushes it through,” Leahy-Daniels said. - See more at: http://www.unionleader.com/article/20150302/NEWS02/150309926&template=mobileart#sthash.A1nWBZ2S.dpuf
