Growing your business with tax incentives
Starting a new business has many rewards but can be challenging. Every great idea needs product-market fit and a plan to get your product or service to the right customer and grow. Some of the biggest questions to answer at the start are financial, like whether you want to bootstrap or find funding, how many employees to hire, what price to charge your customers, and how quickly can you scale to be competitive. With everything else it takes to get your company off the ground you may be missing a key financial component: tax strategy.
Taxes for Growth?
You may not be able to earn money through taxes but it can be extremely advantageous to minimize your tax burden and reinvest that money in your company.
Tax strategy is a financial decision that could have a significant impact on your bottom line, yet is often an afterthought, left until you’ve started generating revenue or need to file taxes. Understanding some of the basics of tax incentives and tax strategy can also help you as an owner as much as it can help your business.
Location, Location, Location
Many startups, from tech to design to marketing, can sell their services to customers across the country and evenaround the world. There's no longer a need to be in the same location as your customers so moving operations or starting from a new location is less and less of a challenge.
Different cities, states, and countries offer all sorts of tax credits and incentives to attract business to their district. Whether it’s a small business tax credit, municipal tax reductions, or property tax exemption, tax incentives are created locally to help attract business and boost the economy. Finding the best ones for your business is key.
Puerto Rico Tax Incentives
One of the best locations in the world right now to grow a business is Puerto Rico. With Act 20 for Export Services, your company will pay only 4% corporate tax. What’s more, there’s 100% tax exemption on dividends to Puerto Rican residents, 100% tax exemption on property taxes for the first 5 years, and 60% tax exemption on municipal taxes.
As an owner, you may also want to apply for Act 22, the individual investors act. With this tax incentive you could pay 0% tax on long-term capital gains accrued during your time as a bona fide resident of Puerto Rico, like those from selling your company. If you aren’t planning to sell your company but still want to invest, you pay 0% tax on short-term capital gains as well, and 0% on interest & dividends from Puerto Rico sources.
Making the move
Hundreds of companies have already relocated to Puerto Rico to benefit from these incentives. Depending on your budget and timeframe, you can hire ‘full-service’ firms that help arrange all the details for you, or you may choose to find each service provider directly, for more control and personal engagement. Imagine the benefits your business could have over its competitors by being able to reinvest the savings in the business.
If you have questions but aren’t ready to reach out to service providers, call PR Business Link at 787-493-9184 and we’ll help.