June 24, 2014
Diane Giordano, Tax & Business Services Partner, Quoted in Long Island Business News Article, "Start-Up NY Stalls on LI"
By: Claude Solnik
It sounds like the best thing to happen to startups since the invention of the Internet.
Television ads for Start-Up NY, New York State’s small-business incentive program, portray a government eager to suspend taxes for new business as an investment in the future. The program’s website is even more encouraging, describing how “businesses can operate 100 percent tax-free for 10 years” by setting up near college campuses and other large-scale R&D facilities, with “no income tax, business, corporate, state or local taxes, sales and property taxes, or franchise fees.”
So why aren’t entrepreneurs rushing to sign up? Why has Stony Brook University – one of a handful of Long Island facilities that would seem primed for a campus-based small-business generator – assisted with only two Start-Up NY applications since its plan was approved in March?
There are several answers. First, startups must meet fairly strict requirements to qualify, including promising to stay in New York for 10 years and to meet not-insubstantial job-creation marks. Second, incentives are only offered to companies setting up in select sites around those college campuses and research facilities – meaning business owners can’t select properties not on the state’s pre-approved list, even if it is geographically close to a campus.
“Startups don’t make money anyway,” said Diane Giordano, a partner at Melville accounting firm Marcum LLP.
While the program could be beneficial to employees of startup firms – “For the new employees, it may be a nice boon,” Giordano noted – this speaks directly to another built-in obstacle. Firms only qualify for the tax breaks if they meet certain hiring milestones, which automatically excludes most startups, which keep costs down by limiting staffing to start.
“You have to prove that you’re hiring people, but how are startup companies going to hire people?” Giordano said. “That’s how you lose your luster.”
Click here to read full article on www.libn.com >>
Click here to read the full article as PDF >>