Despite the states of New York, New Jersey and California containing one of the financial capitals of the world (New York City), and the first and second largest cities for venture capital, they are consistently rated by several sources to be the least business friendly states.
Determining if a state is business friendly is multi factorial, and some of the largest factors considered are; how tax friendly the environment is, cost of living, cost of hiring new employees, formation costs and cost of navigating the business regulations. The industry, sector and type of business are also factors. As far as cost of growth, startup costs, taxation and cost of employees; it isn’t too surprising that New York, New Jersey and California do not rank high on the score board.
New York recently lost a monumental new employer, Amazon, which was anticipated to bring 25,000 new skilled jobs to the state. There were over $1.3 billion in tax incentives offered, and another $500,000,000 in building and infrastructure grants offered, but that still wasn’t enough to entice the tech giant to build part of its new headquarters in New York City. California and New Jersey are also consistently losing large employers, and many are moving and headquartering themselves in other business friendly states and even other countries.
Even though New York, New Jersey and California do not rank high on how business friendly they are, many businesses still choose to headquarter themselves in the states. While more businesses and people have been leaving the states than entering (or starting) for the past 10 years, the high population essentially forces the amount of businesses to stay high.
And just because the states aren’t the most “business friendly” states, that doesn’t mean a business can’t reduce its taxes, reduce the cost of expenses, and offer better benefits to keep top talent around. One of the best ways to do so is through a Payroll Tax Reduction Plan.
A Payroll Tax Reduction Plan can offer an employer an annual tax savings of $1,100-$1,400 a year per employee and provide additional benefits to all eligible employees. This can be done so with a medical expense reimbursement plan which will create tax credits for the employees and tax savings to the employers. The highlights of the plan are below.
Benefits of the plan:
· The employer receives an annual tax savings of $1,101 - $1,400 per participating employee
· Through the limited medical benefit provider, employee receives tax credits to fund additional healthcare and insurance benefits
· The tax credits reduce overall taxable income, decreasing the businesses FICA and payroll taxes
· On average employee benefits quadruple and their net pay DOES NOT change
Employer Eligibility Requirements:
· 25 or more full time W2 employees making at least $25,000 a year.
· Employer must currently offer a healthcare plan
Employee Eligibility Requirements:
· Must currently have healthcare (it does not have to be with the employer, it can be through a spouse, parent the exchange ect)
· Must be full-time with the employer
· Must be a W2 Employee
· Must be 18 years or older
· Must have an annual income of $25,000 or more with the same employer
If you’d like to learn more about how a Payroll Tax Reduction Plan works you can to our office here, or at our contact information below.
Robert Fortune
Founder and Managing Partner, Fortune Advisory Services
347-206-3010
rfortune@fortuneadvisoryllc.com
Disclosures:
TAX- To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposes of avoiding penalties that may be imposed by law. Each taxpayer should seek tax, legal or accounting advice from a tax professional based on his/her individual circumstances.
TAXES- This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions.
Sources:
https://taxfoundation.org/publications/state-business-tax-climate-index/
https://wallethub.com/edu/best-states-to-start-a-business/36934/
https://self-made.io/15-worst-states-america-start-new-business/4353/15/
https://chiefexecutive.net/best-worst-states-for-business-2019-where-to-be/
https://www.citylab.com/life/2017/10/venture-capital-concentration/539775/
https://www.investopedia.com/articles/investing/091114/worlds-top-financial-cities.asp