State Officials Reach Out To Philly Tech Entrepreneurs About Tax Credits They Can Sell
Early-stage companies need cash. The state is helping them get it, by giving them tax credits they can sell.
On Thursday, the Department of Community and Economic Development spoke to about 35 people, many of them early stage tech company CEOs, about the Keystone Innovation Zone program.
Here's how it works: tech companies that launched less than eight years ago and are located within one of 29 designated zones can get tax credits based on how much revenue they're bringing in. There are zones in University City, the Philadelphia Navy Yard, Greater Reading, the south side of Bethlehem, and central Pittsburgh, among other places.
When tax season comes around, the companies can use the credits to lower their tax bills. If any of the credit is left over, they can sell it to other companies for cash.
A lot of early stage companies don't owe the government any money in taxes. They can sell the entire credit.
In either case, companies will typically get 80 or 90 cents for each dollar of tax credit.
Companies can receive up to $100,000 a year in KIZ tax credits, says Kristen Fitch, the program coordinator for the University City zone. "It's a huge asset to early-stage companies," she said.
The point is to give entrepreneurs the cash they need to hire employees, buy equipment, and expand their office space — basically, grow faster, says Jennifer Leinbach, executive director of DCED's Office of Technology and Innovation.