by Stephen R. Gross
In a business environment that typically punishes business, assumes success is based on luck and “good fortune,” and views businessmen as Devils, it is refreshing to see the State of Georgia recognizing its Angels and rewarding them for good deeds.
George House Bill 1069 – Section Two
This bill, signed into law in June 2010, provides for a Georgia Tax Credit of up to $50,000 per year for investors in early stage startup companies in Georgia. Angels typically provide equity or convertible debt to start up companies and use their personal savings to do so.
How Does it Work?
- Credit equals 35% of amounts invested in 2011, 2012 and 2013.
- Credit must wait until the year following the investment made.
- Credit available to accredited individuals or special purpose pass through entities with no operating business activities and less than $5,000,000 in capital.
- Maximum usage is $50,000 per year, but unused credits may be carried forward.
- State of Georgia has a maximum of $10,000,000 in credits available per year. If exceeded, credits will be allocated pro-rata.
- Qualified companies must be less than three years old, employ fewer than 20 people, have less than $500,000 revenue in any prior fiscal year, and cannot have issued more than $1,000,000 in debt from non-commercial loans.
- Qualified companies also cannot be engaged in:
- Retail Sales
- Real Estate
- Professional Services
- Membership Based Activities
- Gambling
- Natural Resource Extraction
- Investment Activities
- Insurance
- Entertainment, amusement, recreation, athletic or fitness where admission is charged
- To be eligible, company must register with tax commissioner prior to being qualified and continue to register each year.