BY: KATELYN CAMPBELL, COMMUNITY DEVELOPMENT POLICY VISTA, THE HUB
Always wanted to start a business in West Virginia? The Legislature is considering several bills that might make that easier.
Senate Bill 365, Senate Bill 119, and House Bill 4452 seek to address key challenges to getting a new business off the ground in the state through a combination of fee waivers and tax credits. These bills would provide specific benefits for populations who often face the largest hurdles to opening a business — low income and young people.
Tax Credit for New Small Businesses
HB 4452, which was introduced on Wednesday, would create a tax credit for new small businesses locating in the state. The bill calls for the calculation of a tax credit for each new small business that would even out to an effective income tax rate of 1% per year for the first five years the business is operating.
Often, a business isn’t profitable for the first year or more. During this time, the entrepreneur is often figuring out how to streamline their processes, or trying to raise enough money to scale production.
If passed, HB 4452 would give a new small business more time to build up and stabilize their business before being asked to shoulder a full tax bill.
The bill was taken up by the House Small Business and Economic Development Committee this morning.
Calling All Young Entrepreneurs
Back in 2016, the Legislature passed the Young Entrepreneur Reinvestment Act, which waives fees for filing articles of incorporation to start a new business or nonprofit for people under 30. Since then, 106 new businesses have made use of the program.
This year, the Young Entrepreneur Reinvestment Act is up for renewal. SB 365 seeks to make the Act permanent rather than adding another sunset provision.
The bill was introduced on January 24 and was approved by the Senate Economic Development Committee on Wednesday. It will now travel to the floor of the Senate to be read three times and voted on before it can head over to the House.
Encouraging Investment In Low Income Communities
SB 119 would encourage investment in low income communities by providing a tax credit to investors (often insurance companies) who make equity investments or investments in long term debt securities issues by qualified community development entities.
The money invested in these qualified community development entities will be used to make investments in the communities they serve. One of the potential uses is for making loans to low income small business owners, who are often not eligible for traditional small business lending resources.
Proponents argue that this bill would incentivize bringing more New Market Tax Credit investments to West Virginia. Opponents expressed concern about tax credits preventing new funds from reaching cash-strapped volunteer and paid fire departments.
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