InvestOhio – What You Need to Know

mnarog on August 1, 2012

InvestOhio
Image: FreeDigitalPhotos.net

What is InvestOhio?

  • New tool from the Ohio Department of Development for helping Ohio small businesses obtain private equity capital to expand their businesses
  • $1B of new private equity investment in Ohio will generate $100M in non-refundable personal Ohio income tax credits
  • Program runs through June 30, 2013 or until all tax credits have been used
  • As of June 2012, $45M of the $100M in tax credits have been used

Who is eligible?

  • S-Corporations, Partnerships, Sole Proprietors
  • C-Corporations are not eligible
  • Businesses must be located in Ohio
  • More than 50% of your employees must work in Ohio
  • Businesses must have less than $50M in assets OR less than $10M in annual sales

How To Make a Qualifying Investment?

  • The business owner must register through the Ohio Business Gateway
  • The business owner needs to apply for the InvestOhio credit and the cash needs to be injected into the operating entity within 30 days of the application being completed
    • Applications can be completed after the cash injection has already been made as long as there are still tax credits remaining in the InvestOhio program
  • The business owner can take personal cash and invest it in their operating entity
  • The business owner can take out a personal loan (such as borrowing against their home) and invest the proceeds in their operating entity
  • The operating entity must provide evidence to the Department of Development within 30 days of completing the expenditures or within 7 months of receiving the cash investment, whichever occurs first

Eligible Expenditures

  • The operating entity is required to reinvest the infusion of cash within six months of its receipt.
  • The operating entity must reinvest the cash into the following categories:
    • Tangible Personal Property
    • Vehicles (must be primarily used for business)
    • Real Property
    • Intangibles
    • Compensation
  • The operating entity must hold the reinvestment property for a minimum holding period of two years

What Types of Expenditures Qualify?

  • Tangible Personal Property such as Equipment
  • Vehicles– must be purchased in Ohio and titled in Ohio
  • Real Property
    • Land Improvements
    • Building Improvements
  • Intangibles
    • Franchise License
    • Patent Purchase
  • Compensation
    • Hiring additional employees for newly created positions

What Types of Expenditures Do Not Qualify?

  • Goodwill resulting from acquisitions
  • New vehicle for the business owner
  • Bonuses or wage increases for the business owner
  • Reinvestments in businesses not located in Ohio