More than $497,000 in tax credits helped eight Williamsport/Lycoming Keystone Innovation Zone companies expand product lines, buy land and hire more employees.
"(The credits are) unique and powerful for small companies," Katie Bell, Keystone Innovation Zone coordinator said. "The thing they need most is cash in business. The company can sell the credits for cash once they get it."
The credits from the state Department of Community and Economic Development are first used to cover owed taxes and whatever is leftover may be sold for cash. The cash is then put back into the business for things like renovations or new hires.
"There are a handful of instances where companies hired someone as a result of cash in their pocket," Bell said. "It's a reinvestment back into the business. It's a tremendous benefit to a start up company."
The eight companies that received the tax credits are Invent Yourself Rich LLC; Keystone Leather Distributors LLC; Lang's Chocolates; Strouse Industrial, LLC; Tasseron Sensors Inc.; The R.A.T.E. Company LLC; TLC North LLC; and TQ Electronics Inc.
Tasseron Sensors Inc., 2401 Reach Road, used the tax credits to help design a new product line and buy much needed land to expand. The company is a subsidiary for heating, ventilation and air conditioning temperature sensors and related products for the North American and Canadian market.
Kevin A. Pool, national sales manager, said he came into the market wanting a product that stood apart from the competition.
"We had to make ours better and different," he said.
The Qwik Series contains a variety of temperature sensors that are designed to save time and labor in installation. Each product uses the Qwik Connect system, which eliminates wire nuts.
The new line was developed in a year and a half, Tom J. van Dijk, managing director, said. With their original line, the company sold in bulk and only needed a few customers. The Qwik Series orders are not as large, so he said they needed to get their name out in the market, by going to shows and using social networking.
"(Keystone Innovation Zone) helped greatly with that," van Dijk said. It helped with developing the line and getting patents and trademarks.
The money from sold credits also helped pay for land since Tasseron Sensors Inc. is outgrowing its space in the Hope Enterprises building. Since they need to stock some of the items that companies need immediately, they need room to put it.
Construction for the new building is expected in the next couple of years in Choate Circle, Montgomery.
At Keystone Leather, Dave Murdoch, co-owner, said he and the other co-owner, Dave Schall, used the money to hire more employees. The business grew from eight to 14 people. It specializes in the manufacture of leather components for the footwear and equestrian industries.
Murdoch said hiring six people does not seem like a lot, but it helps them turn orders around faster.
"(Keystone Leather) has grown nicely," he said. "We started in 2003. We've been growing ever since."
The company received tax credits for the past five years and Murdoch said he would continue to apply for as long as they were eligible.
Since 2007, Keystone Innovation Zone companies received more than $1.7 million in credits. Each year, the state makes $25 million in tax credits available to the zone companies.
Tax credit dollars are awarded based upon a company's increase in revenue between two calendar years. Tax credit amounts are 50 percent of the increase in revenue, up to $100,000.
Extra credits are usually sold through broker firms and companies receive 85 to 90 cents on the dollar. For a business that made no money its first year and $200,000 the following year, it would receive $100,000 in credits, which could be sold for between $85,000 to $90,000 cash.
Companies also can sell the credits to an individual or a company owner who wants to use them to pay off tax credits.
"This is the lifeblood of our economy," Bell said. "It's a great way to encourage a start-up to stay in the business. A lot of start up companies go out of business for a variety of reasons. These credits keep them moving down the path with the vision they have. It's one more thing the state is providing to help them move down that path. It creates jobs."
There currently are 16 Keystone Innovation Zone companies. When the zone was created in 2005, three companies pre-qualified.
Hosted by IMC Inc., the Williamsport/Lycoming Keystone Innovation Zone is part of a statewide program encouraging innovation and business start-up growth.
