OFFICIAL PUBLICATION OF THE NEBRASKA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

Pub. 3 2021 Issue 5

Business-table

State Tax Briefing: The CPA’s Critical Role in Nebraska Business Expansions

Nebraska Society of Certified Public Accountants
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The speed and force at which the economy and business models are changing is unprecedented. Driven by both pre-COVID and COVID global, regional, and local demographic, political, technology, and business model changes, we are in the midst of a rapidly accelerating “perfect storm.” This is affecting the lives of every individual, organization, and government today. Business leaders, now more than ever, know that if they don’t innovate and grow, their companies will die or fade quickly.

The Business Expansion Decision-Making Process


There are a variety of business, legal, financial, tax, and incentive considerations that go into business expansion, site selection, and business development project decisions.

Once a decision is made to expand or move some part of a business, the business expansion, site selection, and business development process across the U.S. normally follows a well-thought-out methodology. Those steps are normally as follows:

Step 1: Business and Location Criteria Defined

Step 2: High-Level Location Factors Screened

Step 3: Site & Community Level Factors Analyzed and Screened

Step 4: Site Due Diligence and Incentives Application/Negotiations

Step 5: Site Control and Acquisition

Step 6: Project Construction and Implementation

Key to success is team play and collaboration with the company, its business expansion legal team, and its CPA. The company’s CPA should ideally be involved in either all of the above steps or selected steps as appropriate to accomplish company objectives.

StateTaxBriefing-Chart

Nebraska’s Business Expansion Incentive Programs


One of the key considerations in business expansions or moves is the potential for decisions impacting state and local business incentives.

Every year, state and local governments award billions of dollars in business incentives to those companies throughout the country that actively seek these benefits as part of their site location and expansion decisions.

Nebraska CPAs are familiar with Nebraska’s new Imagine Nebraska incentive program, which is the third generation of Nebraska’s leading business growth incentive platform. In a prior article, we’ve reviewed some of the key provisions of the Imagine Nebraska program.

Nebraska has a variety of other potential incentives available for companies that are expanding in the state. These include the following:

  • Local Option Economic Development Grants: Cash grants made by cities or counties to companies expanding in their area.
  • Microenterprise Tax Credit Act Credits: Refundable income tax credits provided to individuals actively involved in a microbusiness.
  • Site and Business Development Act Grants: Grants made by the Nebraska Department of Economic Development for assistance with industrial site and building development.
  • Nebraska Innovation Fund Prototype Grants: Matching grants that aid with product development to Nebraska companies.
  • Community Development Block Grant Loan Program: Partially forgivable loans for companies that will expand the state’s economic base and that create quality jobs principally benefiting employees in the low- and moderate-income levels.
  • Nebraska Seed Investment Program: Up to $500,000 investment funding for Nebraska small businesses (less than 500 employees) to assist with turning research, innovation, and technology into a viable business.
  • Tax Increment Financing: Deployment of property tax revenue increases (15 or 20 years) to fund the company’s share of public infrastructure and certain related company project costs.
  • Nebraska Rural Development Act Tax Credits: Tax credits, equal to $3,000 for each new employee and $2,750 for each $50,000 of new investment, for development in rural areas (and certain impoverished parts of Omaha). Also, 10% credits, up to $150,000, are available for livestock modernization and expansion projects.
  • New Markets Job Growth Investment Act Funding: Funding for expanding companies in “low-income” areas of Nebraska, funded by federal and Nebraska tax credits.
  • State Trade Expansion Program Funds: Grants that help companies defray the cost to market internationally and assist with identifying potential international buyers.
  • Manufacturing Equipment Sales Tax Exemption: Sales tax exemption for purchases of manufacturing equipment and repair parts.
  • City/County Infrastructure “Entitlements”: Funding assistance or cost sharing for infrastructure improvements needed for expansion project.
  • Pollution Control Sales Tax Refund: Refund of sales tax paid on equipment used in controlling industrial or agricultural waste.
  • Nebraska Transportation Innovation Act Grants: State grants to offset the cost of transportation improvements needed for an economic development project.
  • SBIR/STTR Grants: The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs provide Nebraska matching grants for companies that have received federal grants.
  • Nebraska Advantage Research & Development Tax Credits: Nebraska income tax credits for companies that incur research and experimental expenditures in Nebraska.
  • Nebraska Academic Research & Development Grants: Matching competitive grants for research and development activities done in conjunction with a Nebraska college or university.
  • Talent Recruitment & Retention Tax Incentive: Employee shareholders of corporations may exclude the capital gains on the sale of their stock from Nebraska income tax.

The availability of most incentives is normally dependent on the team actually identifying, seeking, and applying for the incentives before undertaking a project expansion or relocation.

Often these incentives need to be negotiated with the state or local communities as part of an overall site selection and incentive package.

The CPA’s Role in Nebraska Business Expansions


A CPA is normally one of a company’s most important advisors. Business leaders involve CPAs in making key decisions, finding business opportunities, and financing a company’s growth. So, when a company has an expansion opportunity, it is natural that CPAs should be deeply involved in the process of providing business expansion assistance in at least the following ways:

  • Business or Project Planning
  • Economic Assessments
  • Project Financial and Cash Flow Analysis
  • Identifying Potential Project Incentives
  • Leveraging Community Relationships
  • Incentive Annual Compliance Requirements
  • Working Closely With the Company’s Business Expansion Team

Healthy, Growing Companies


A healthy, growing company will seek expansion opportunities throughout its life. The oft-repeated line that says, if you aren’t growing, you’re dying, is true.

Those companies that take their foot off the gas pedal end up with disastrous results. It can precipitate a slide down a slippery slope. It can turn off the interest of possible successors and business buyers. It can result in the loss of your customer base, which begins to see your company as no longer responsive to their growing needs.

Over the past several years, companies have become much more analytical in making decisions on their expansion policies. In addition to a focus on strong internal (so-called organic) growth, a strong overall expansion policy will focus on consistently looking for opportunities to purchase other businesses, to expand at existing or new sites, and to develop or acquire new technology and business models.

The CPAs who deploy their talents as part of the company’s business expansion team have an opportunity to be of tremendous help to the continued growth and success of their business clients and the growth of jobs throughout our Nebraska communities.

Nick-Niemann

Nick Niemann and Matt Ottemann are partners with McGrath North Law Firm. As members of McGrath North’s Business Expansion Team, they collaborate with CPAs to help companies accomplish their business moves and expansions. See their website at www.NebraskaIncentives.com for more information on Nebraska incentives, including their Nebraska Business Expansion Decision Guide, which provides more information on the listed incentives. You may also contact Niemann or Ottemann at (402) 341-3070 or at nniemann@mcgrathnorth.com or mottemann@mcgrathnorth.com, respectively.

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