In times of economic hardship, governments will sometimes offer incentives to businesses to help boost productivity, lower prices, and increase consumer demand. Some of these incentives include outright cash grants, tax incentives, subsidies, and other forms of assistance that you can apply for if you are eligible.
Most of the time, business incentives are given to fledgling companies and entrepreneurs who are just starting out. This encourages people to engage in worthwhile businesses rather than spend their money unproductively, or hold on to money, which stifles consumer spending.
Here are some types of business incentives you can look into, and how to be eligible.
Tax incentives. Tax incentives are usually discounts from tax payments that the government will allow you in exchange for doing certain activities. Through tax incentives, your tax liability are lessened by a certain amount, which is sometimes equivalent to the amount you spend on these activities. For instance, if you donate money to charity, that can be considered tax deductible. This helps your businesses in two ways. One, you gain goodwill and an enhancement in your public image. Secondly, you pay less taxes.
Another way is by investing in artwork. While artworks from the masters might cost millions, big corporations buy these as a form of tax shield, especially when the government wants to preserve the arts. The benefits are the same. You get to keep great works of art, and you can deduct these from your tax liability.
Tax incentives may also be given to companies that focus on producing or buying green products. For example, if you are buying a fleet of cars for your company, you can choose hybrid cars over conventional internal-combustion cars, and the state can lessen the tax burden. You get to save on tax payments, and you get environmentally-friendly, fuel-efficient cars at the same time.
Cash grants. Cash grants, meanwhile, are usually given to companies or academic institutions that undertake important activities or research work that may not necessarily be profitable. For instance, your electricity company might be doing comunity service work by connecting impoverished communities to the grid. Or your pharmaceutical company might be providing free medical assistance to people who cannot buy medicines. Some international organizations or governments are open to giving cash grants to finance such activities.
Cash grants usually come with conditions, though. For example, you may have a limited choice of suppliers or contractors. Or you might need to undertake some changes in the business or local laws.
Research and training incentives. Companies can also seek financing and support for research initiatives. States and financial institutions usually partner with businesses with experience in particular fields, in order to conduct research and training, in exchange for money, resources, or even tax discounts. For example, an IT company might be tapped to help train students, in exchange for tax discounts. Or a school may be tapped to conduct scientific research, in exchange for funding.
In any business relationship where incentives are being discussed, the activity is usually mutually beneficial. Your business can partake of these incentives in exchange for something that is also useful to the state, institution or company that is giving you the incentives. In a way, this turns out to be synergistic, because two entities benefit each other, and can end up benefiting society at large at the same time.