July 29, 2011 in ATDC News

Taking Advantage of the Angel Investor Tax Credit

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Mitchell Kopelman has a little advice for most young entrepreneurs and startups. Take advantage of the state’s Angel Investor Tax Credit, and do it as quickly as possible.

“The biggest issue we’ve seen at ATDC is someone might wait to apply until after they have an interested investor,” said Kopelman, a partner with Habif, Arogeti & Wynne, LLP, the largest independent CPA firm in Georgia. “We say, send in the application now. This way, when an investor is interested, your company will already be approved by the state. It’s free and it’s good for one year.”

Signed into law by former Gov. Sonny Perdue in June of 2010, the legislation took effect at the beginning of 2011 and helps to promote the development of startup companies in the state by encouraging direct investment from individuals in high?tech businesses.

The credit provides up to $50,000 annually – or 35 percent of the amount invested in the startup – for individual investors of early-stage, startup companies in Georgia. It’s available for investments made in 2011, 2012 and 2013, however, the credit cannot be used until two years after the investment is made. Other qualifications require that the investments come in the form of cash in exchange for stock by accredited investors that manage $5 million or less in capital. In addition, applicants must be Georgia-based companies, in business for less than three years with fewer than twenty employees. They can have no more than $500,000 in revenue and less than $1 million raised by debt or equity.

Access to early-stage growth in young companies is often difficult to obtain, so the Angel Investor Tax Credit could potentially help boost the Georgia economy by strengthening its entrepreneur-driven community and creating new, high-paying jobs. While there are some industry limitations, most technology companies are eligible so Kopelman encourages ATDC members to read up and apply for the program.

For a business to qualify as an eligible company under the angel tax credit, the startup must register first with the tax commissioner using Form IT-QBR. Although some startups experienced form approval delays in the initial months of the program, Kopelman said the process is moving more quickly now.

“The form itself is very easy,” said Kopelman, who chairs his firm’s Tax Group and Technology Practice. “The issue is that because it was new to the state, approvals were moving very slowly. In at least half a dozen cases, we’ve been able to help accelerate the approval process for these startups by contacting the state directly. The key is to send the form in now, and two months before it expires each year, assuming the company still qualifies.”

For more information on the Angel Investor Tax Credit program or links to the program requirements and Form IT-QBR, read this article co-authored by Kopelman.


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