InvestOhio provides a non-refundable personal income tax credit to investors that provide new equity (cash) into Ohio small businesses to acquire an ownership interest in the company. The small business is required to reinvest that infusion of cash into one of five categories of allowable expenses within six months of its receipt. The investor must retain his or her ownership interest for a two year holding period before the tax credit may be claimed. The small business must similarly retain the property that it purchased from the cash infusion for the entire two year holding period.
Individuals (or pass through entities with individuals as owners) who invest cash in a qualifying Ohio small business. Note that the qualifications include (1) investments must be made in a qualifying Ohio small business and (2) the investment must be held for 2 years
How much/What do you get
InvestOhio provides a small business investment certificate (InvestOhio tax credit), which represents a 10 percent personal income tax credit for the investor, based on the amount invested. The tax credit is limited to $1 million per person.
How you get it
In order to be awarded a small business investment certificate (an InvestOhio tax credit) there are several steps to follow. While more detailed information can be found below in our tutorials and FAQ, the process requires the following steps:
- Both the investor and the small business must register for InvestOhio through the Ohio Business Gateway.
At the end of registration, each registrant will receive an InvestOhio User ID. It is a unique number that prevents parties from having to share sensitive information with proposed business partners. This number will be required to complete Step 3, below.
- The parties on a given transaction will decide who is responsible for applying to the InvestOhio program.
Regardless of whether it is the investor or the small business, the party that applies must obtain the InvestOhio User ID of the other party on the transaction. They must also reach an agreement with that party about when the investment will take place and the amount of the investment.
- The party that is responsible for applying will do so at the Ohio Business Gateway , starting July 1, 2015.
The application will seek only the information described in Step 2, above. The timing of when an eligible investor or small business applies is critical, as credits are awarded on a first come, first served basis. Additionally, an application must be filed in the same state biennium as the investment (currently July 1, 2015-June 30, 2017). Once a party has completed an application, he or she will be given an InvestOhio Transaction ID number. This number will determine the priority for that transaction. Once the Director has accepted enough transactions to fulfill all of the available tax credits, the Director will inform applicants of where their transactions sits in the line of unfulfilled transactions so that they can estimate how close their transaction is to potentially being awarded a tax credit.
- Regardless of whether a transaction has the necessary priority to be awarded an InvestOhio tax credit at the time of application, the investor must make the investment on or around the date described in the application.
Some transactions that were initially eligible may be disqualified for failure to follow the program rules. If a disqualification takes place, the Director will simply move on to the next InvestOhio Transaction ID that was not awarded a tax credit, so it is critical that those transactions that were not immediately eligible for a tax credit still complete the investment.
- Those transactions that have the necessary priority at the time of application will be notified by email of their eligibility.
The investor must make the investment on or around the date described in the application and provide evidence of the investment to the Director within 30 days.
- The small business must then make allowed expenditures and provide evidence to the Director within 30 days of completing the expenditures or within seven months of the investment, whichever occurs first.
- Both the investor and the small business must retain ownership interest (investor) and property (small business) for the duration of the holding period (two years).
Both parties must provide evidence of continued ownership to the Director upon the completion of the holding period.
- If the parties to the transaction have met the above steps, the investor may claim the tax credit.