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Advantages of Incorporating a Business in West Virginia
Will a start-up company in West Virginia achieve sustainable growth? What are the possible benefits of conducting business in this state? Economically, West Virginia has been quite strong and the Real Gross Domestic Product (GDP) in 2017 was $67.83 billion, which is quite a rise from the $62.16 billion in 2007. According to West Virginia Economic Outlook 2018-2022 Report published by Bureau of Business & Economic Research, the energy sector is considered an important driver of economic activity in the state. One of the key industries in the energy sector according to the report includes the natural gas industry, which peaked in terms of production growth by the end of 2014. One of the areas that the state economy excelled in is export where approximately $3.7 billion was generated through trading during the first two quarters of 2017.
Setting up an LLC or Corporation – Advantages
You can choose to register a new company in West Virginia as a Domestic Corporation, Foreign Corporation, Limited Liability Company (LLC’s), Non-Profit Corporations, and Limited Liability Partnership (LLP’s). Each type of business entity has its own set of advantages. Let’s look at the advantage of forming the most common forms of business entities.
Advantage#1: Salient benefits of Corporation or LLC formation
Corporation
- West Virginia Tax Credits: If you register a new business in West Virginia as a corporation, you can take advantage of the following tax credits:
– Corporate Headquarters Relocation Credit: If you are planning to relocate your business or corporate headquarters to West Virginia and also create a minimum of 15 new jobs then you will be entitled to this tax credit. This is a non-transferable and non-refundable credit that can be used for offsetting up to 100 percent of occupation and business tax as well as corporate net income tax liability. You can benefit from this credit for a period of 13 years. Download Information and Application
– Economic Opportunity Tax Credit: If you register a new company in West Virginia then you can avail of this tax credit. You will have help in creating a minimum of 20 new jobs and also make a qualified investment in a business facility. This will ensure an offset of up to 80% of the corporate net income tax that can be attributed to a qualified investment. Sample Application
– High-Tech Manufacturing Credit: As a part of this tax credit, you will have to create a minimum of 20 new jobs and your business should be involved in manufacturing certain peripheral and computer equipment, semi-conductors, and electronic components. The benefit is that you will receive a tax credit that will offset 100% of the occupation and business tax as well as corporate net income tax for a period of 20 consecutive years. - Change in Ownership: If you have formed an S Corporation in West Virginia then sale, purchase, as well as gifting of stock can facilitate changes in ownership. The changes can take place without disturbing the ability of the corporation to conduct its business.
LLC
Business Incentive Programs: If you register a new company in West Virginia as an LLC then there are a variety of business incentive programs that you can benefit from. These include, popular programs like:
- Energy Incentives: The state offers businesses a variety of energy incentives including Residential solar energy tax credit, Tax exemption and special property tax assessment for commercial wind energy and Sales tax exemption for ENERGY STAR products
- Community Development Incentive Programs: If you register a new business in West Virginia, you can take advantage of several programs being administered by The Department of Commerce and that includes grants like:
– Small Cities Block Grant (SCBG)
– Land and Water Conservation Fund (LWCF)
– Neighborhood Stabilization Program (NSP) - Sales & Use Tax Exemption: Your business can benefit from sales & use tax exemption in the state if it is offering the following sales and services:
– Sales of radio or television broadcasting time
– Magazine and newspaper advertising space for advertisement of goods and services
– Construction, repair, alteration, decoration or improvement of real property
– Sales of day care center services
– Mobility enhancing equipment and prosthetic devices
More Information - Flexible Profit Distribution: A start-up company in Vermont which is an LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is 50-50.
Advantage#2: Other Business Incentive Programs
West Virginia offers small businesses and medium or large enterprises a strong infrastructure that enhances business operations anywhere in the state. It is the wide variety of incentive programs that provides a start-up company in West Virginia a platform that helps businesses to achieve higher growth. Some of the popular program categories are:
- Incentive Programs in the Opportunity Zone: The Opportunity Zones (OZ) Program is just perfect for a start-up company in West Virginia or a business that is relocating to this state. In order to benefit from this program, you will have to establish your business in an Opportunity Zone in the state. This program has been implemented by the U.S. Department of the Treasury and the Internal Revenue Service (IRS). One of the benefits for businesses in this zone is the preferential tax treatment that they will receive and this will encourage growth and revitalize areas that are facing economic challenges. List of designated OZ
- Central Appalachia Empowerment Zone (CAEZ): If you register a new company in West Virginia then you can benefit from the “Empowerment Zone/Enterprise Community (EZ/EC) Initiative”, which is integral to CAEZ. You can benefit from several funding and tax incentives like the Small Business Micro Loan Program. Map of CAEZ Service Area
Are there any Disadvantages of Incorporating in West Virginia?
If you are wondering if there are any disadvantages if you register a new company in West Virginia then it is important to know that every state has its own advantages and disadvantages. Similarly, every business also has its own advantages and disadvantages or pros and cons. The disadvantages in the state of West Virginia are specific to the type of business entity you form. For example, a limited liability company has a “Limited Life” while the process of incorporation takes more time than other forms of organization.