The Louisiana Angel Investor Tax Credit (AITC) is an opportunity for investors who want to support local businesses and get tax benefits in return. This program gives accredited investors a 25% tax credit for their investments in Louisiana-based businesses, which can help lower their taxes. It has a robust annual cap, which stands at $3.6 million.
The AITC was designed with the goal of boosting economic growth, creating jobs, and improving Louisiana’s startup industry. If you are interested, you should know that understanding the program’s laws and regulations is not that easy. Missing any of the laws and making an error can result in you losing the tax benefits.
That is why it is important for small businesses as well as investors to work with a small business accountant in San Leandro, CA.
Understanding the eligibility criteria for AITC
The Angel Investor Tax Credit (AITC) in Louisiana is designed for investors who invest in certified Louisiana Entrepreneurial Businesses (LEBs). In order to qualify as a LEB, businesses must meet specific requirements.
First of all, Louisiana should be the primary location of the business. This means that its workforce should be working in the state. A detailed record of both long- and short-term forecasts, profit and loss projections, and how you are using the funds is also required.
The small business should not have a gross income of more than $10 million annually and should have a net worth of at least $2 million. To ensure that the help only goes to deserving businesses, your business must also only have 50 or fewer full-time employees.
It is also important to know that AITC is only for businesses that lack funds. This excludes businesses involved in retail, real estate, professional services, gaming or gambling, natural resource extraction, and financial services. The company should also be able to demonstrate how it plans to increase employment in the state by allocating funds.
Finally, businesses must possess a Louisiana Tax Identification Number. During the application process, make sure to submit a detailed business plan and any other documentation required to prove eligibility.
Benefits of the AITC for Louisiana businesses as well as investors
Whether you are a small business owner or an investor wanting to invest in a small business in Louisiana, there are benefits for both.
The Angel Investor Tax Credit (AITC) in Louisiana allows investors to gain a substantial tax credit worth 25% of the invested amount. They can increase this up to 35% for investments in federally designated Opportunity Zones. And these tax credits are transferable! If the investor cannot fully use it, they can sell them to other Louisiana taxpayers.
For small businesses, the benefits are equally attractive, if not better. They receive financial help from investors, which helps with the sustainability of their organization. Studies have shown that businesses that received funding through AITC showed improved employment rates.
There are various requirements set for the eligibility criteria, as already mentioned in the previous section. This ensures that the help only goes to companies and businesses that deserve it.
Benefits of hiring an accountant
While the Louisiana AITC program seems to provide more benefits for investors, it can add value to your small business. When investors have the incentive to invest, they are going to put money into your business. Therefore, you should determine whether you meet the eligibility criteria and work towards the application process.
If you are a small business in Louisiana and are hoping to get funds from a specific investor, an accountant can help you. By collaborating with you to create a compelling application or request for funds, you increase your chances of acquiring the investment. Your application process will be more attractive and have fewer chances of error or omission.
Last but not least, you will be better able to explain to the investors how the investment will be helping them directly! Hire an accountant today!
