By Jessica Salerno-Shumaker, OSCPA senior content manager
Site selection is a process CPAs should be prepared to help clients navigate as they act as trusted business advisers.
“When I'm talking with a potential client, I'm looking at the timeline for decision making,” said Jenny Massey, director of site selection & business incentives at Sikich. “How quickly do you need to find the site? Are you going to build a new building or lease space? What kind of space and how much do you need?”
Choosing the right site for their business could mean attractive incentives when given proper thought, but organizations need to consider these incentives before taking certain actions.
“If I hear them mention adding jobs, making a capital investment, buying equipment, building something new, or adding square footage, those are all triggers for incentives at the local, state and sometimes federal level,” she said.
Massey said at the state level incentives can be tax credits for job creation and tax credits for investment. And while incentives are attractive, she said the site selection process takes precedence with incentives acting as “icing on the cake that helps get the deal done.”
“There is also a huge push right now at the federal level to promote sustainability and solar energy as part of the site selection process,” Massey said.
CPAs should be mindful of return on investment for their clients. Massey mentioned that incentives are usually worthwhile to companies adding a minimum of 15 new jobs over a three-to-five-year period and making an investment in building or equipment of more than $100,000.
“Many states are becoming more targeted and strategic in how they offer incentives,” she said. “They are targeting specific industries and grading projects based on factors important to the community.”
Communities often consider the type of industry, quality and wage of the new jobs, and the tax base added; any non-retail business considering an expansion or relocation of its operations would be wise to investigate potential economic development incentives available to support the project.
For more learning on construction-related taxation issues, attend our seminar on Critical Issues Involving Taxation of Construction Contractors.