QUALIFIED EMERGING TECHNOLOGY COMPANIES (QETCS)
Are you an early stage technology startup based in New York State? If so read about the tax incentive below that is available. The company doesn’t necessarily need to be incorporated in New York to qualify as most early stage tech companies are setup as Delaware C-Corps. The tax deadline is November 30th of each year to file or recertify. If you would like to learn more about the incentive and need help with the application forms please contact us for assistance. The information below was sourced from the Empire State Development website and the New York State Tax Department.
A QETC is defined as a company located within New York State, whose primary products or services are classified as emerging technologies under Public Authorities Law section 3102-e and whose total annual product sales are $10 million or less.
A company which has Research & Development (R&D) activities in New York State and whose ratio of R&D funds to net sales equals or exceeds the average ratio for "all surveyed companies classified as determined by the National Science Foundation" in its most recent Survey of Industry Research and Development, or any comparable successor survey as determined by the New York State Department of Taxation and Finance and whose total annual product sales are $10 million or less.
Emerging technologies may include:
TAX CREDITS FOR QETCS
Qualified Emerging Technology Employment bCredit
A refundable tax credit of $1,000 per new full-time employee (i.e. employees in excess of 100% of base year employment level), available for one three-year period (i.e. the year the credit is first claimed and in each of the next two years) provided minimum employment levels are maintained.
Qualified Emerging Technology Company Capital Tax Credit
QETC investors are allowed a credit equal to a percentage of each qualified investment in a qualified emerging technology company that has been certified by the Commissioner of Taxation and Finance as follows:
Qualified Emerging Technology Company Facilities, Operations and Training Tax Credit A taxpayer that is a QETC and has no more than 100 full-time employees, of which at least 75% are employed in New York State; has a ratio of research and development funds to net sales (as referred to in Public Authorities Law section 3102-e) which equals or exceeds 6% during its authorized taxable year; and has gross revenues, along with the gross revenues of its affiliates and related members, not exceeding $20 million for the taxable year immediately preceding the year the taxpayer claims this credit may earn a refundable tax credit equal to the sum of the following three components:
Source: New York State Empire State Development.
If you are interested in applying for your company to be part of this program the tax deadline is November 30th of each year. An application must be completed every year to remain in the program. If you would like to learn more about the incentive and need help with the application forms please contact us for assistance.
Clarification of Qualifications for Qualified Emerging Technology Company (QETC) Tax Credits
Application for Certification of a Qualified Emerging Technology Company.
Instructions for Claim for QETC Employment Credit (PDF)
Claim for QETC Employment Credit (Form DTF-621) (PDF)
Department of Taxation and Finance
Empire State Development Homepage
Corporation Tax Resource Center
For more information, contact:
NYS Department of Taxation and Finance
W.A. Harriman Campus
Albany, NY 12227
Phone: (518) 485-2889
Photo credits: Campaign Creators (https://unsplash.com/@campaign_creat), Alex Kotliarskyi (https://unsplash.com/@frantic)
On Wednesday October 23rd, Akshay Shrimanker of Shay CPA P.C. conducted an accounting, finance, and tax workshop for early stage startups inside New Lab -- a coworking space in the Brooklyn Navy Yard which is home to over 130 startups and considered an oasis for entrepreneurs. The talk was presented to the H2 Accelerator -- an accelerator program that is sponsored by Shell and Toyota in partnership with NYSERDA. The program is led by Fraunhofer USA Center for Sustainable Energy Systems, Greentown Labs and the Urban Future Lab - NYU Tandon.
The workshop began around noon, with Shrimanker starting it off with a simple introduction to himself and a general background information about his firm.
He focused on the finance and accounting part of the workshop first, explaining the importance of basic financial planning such as budgeting, historical financial data, and estimating revenue and expenses. He also went over some key terms like MRR, ARR, Churn, COGS, and GAAP.
The workshop then continued with Shrimanker talking more in-depth about financial statements, which include things such as balance sheet, income statement, and statement of cash flows. Financial modeling was covered as well, where he went over six types of financial model drivers.
The first part of the workshop concluded with the talk of startup revenue recognition, which is key to generating accurate financial statements.
He then went over tax implications and planning, explaining why most early tech companies set up as either LLCs or C-Corps. Tax credits and incentives for tech startups were also discussed, as well as highlighting some of the key changes from tax reform that went into effect in tax year 2018.
Some of the important dates for startups in the upcoming 2020 tax season were picked out and analyzed as well, and Shrimanker brought up the benefits of Qualified Opportunity Zones -- a new incentive that is intended to promote investment in economically distressed communities.
R&D credit claim was also mentioned, which is a general tax credit that can help qualified startups to cover research and development costs in the United States. He thoroughly explained how to fill out IRS Form 6765, which is needed to claim the R&D Tax Credit to offset payroll taxes.
The workshop came to an end around 2 p.m. with a discussion of some inhouse and outsource options that startups can use to complete their accounting, bookkeeping, and tax compliance. He then went over some optimal tools to track revenue such as SaaSOptics, QuickBooks Online, and Financial Modeling with Excel Spreadsheets.
A Q&A session continued after the workshop, where Shrimanker answered individual questions from different startups in attendance.
We would like to thank the startup founders in attendance for asking some great questions and the NYU Urban Future Lab team including Rachel Fleischer and Joe Silver for hosting us. To learn more about the H2 Accelerator and Hyrdrogen innovation please visit the following site. https://www.h2refuelaccelerator.com/
Written by Tony Kyaw
Akshay Shrimanker, President of Shay CPA P.C., gave an accounting and tax workshop to small startups inside the Zahn Innovation Center at City College this past Thursday. The attendees to the workshop include Fitko, STEM Hive, Luxz, and Flora Mind -- who were all among the CCNY startups chosen to participate in the 2019 Zahn Accelerator.
Shrimanker started off the workshop by helping the founders understand their tax obligations and filing requirements. He also explained in-depth about different forms each startup need to file, as there were different types of startups in attendance such as C-Corps, LLCs,and not-for profit organizations.
There were discussions on various topics as well, such as why Wave Apps may be a more economical accounting system solution for pre-revenue startups rather than other accounting packages and why local banks are a better choice to work with than large commercial banks.
Shrimanker later touched on some important finance and accounting terms, before closing out the two-hour long workshop with a Q&A session for each startup.
To learn more about the Zahn Innovation Center and the companies that are involved please visit: http://www.zahncenternyc.com
Written by Tony Kyaw
Akshay Shrimanker, President of Shay CPA P.C., gave a two-hour business development workshop this Tuesday alongside Michael Maldonado of America’s SBDC located at Queens College. The workshop was held inside the Tech Incubator at Queens College and was aimed to educate small businesses that are looking to expand.
Maldonado started off the workshop by explaining basic business terminology, before moving on to key tips, useful tools, budgeting advice, and funding sources. He also went in-depth about why local community banks may be better suited for startups than commercial banks, as well as going through a list of alternative lenders.
He finished his part of the presentation by explaining the general criteria and disqualifiers of money lenders.
Shrimanker then took over the workshop to speak on improving the financial health of businesses. He first walked through the basics of balance sheets, which consist of assets, liabilities, and equity.
He then went on to talk about income statements, and explained in-depth about revenue, expenses, and net income/loss.
A small Q&A session was held between the presenters and attendees before the workshop came to a close around 2 p.m.
You can listen to the whole presentation by clicking this link.