If you’re a startup in Arizona seeking to take advantage of the Angel Tax Credit program, here is what I recommend you’ll need:
Psychic abilities – the AZ Dept of Commerce wants you to project tax returns for your startup into the year 2012. Does anyone else have a clue what their tax returns will look like in five years? It reminds me of the Mitch Hedberg line:
Interviewer – “Where do you see yourself in 5 yrs?”
Interviewee – “Umm, celebrating the 5th year anniversary of you asking me this question!“An impossible history for your company consisting of three years of past financials. That’s right. They want to see three years of history for companies to be eligible. Sooooo, let me get this straight- this program is intended to help secure angel investment for startups and yet you have to be in business three years in order to qualify? Hrmmm…- A PhD in beauracracy with a minor in non-sensical studies – you really just have to read the email exchange below to appreciate the Yossarian-esque “Department of Redundancy Department” ridiculousness.
- Five months of lead time to get them to actually read your application. I filed our app on Oct 5th of 2006 when we were raising money thinking it would be a nice bargaining chip to have in negotiations with potential investors to close anybody that was on the fence. Wow, I’m glad we didn’t need that chip… it took them until March 2nd to even read our application. I can understand if there’s a backlog of applications because the program is so wildly popular, but they’ve certified 25 companies in 5 months. That’s five a month… one each week… what are these people doing the rest of the time?
I couldn’t find the 13-page application anywhere on their site but fortunately i saved a copy of the one I completed. I emailed the lady last week but given their response time thus far I’m not holding my breath for an answer from her until August.
Our friends from Fortymedia were recently kicked out of their garage by the City of Tempe – they have zero foot traffic and are a small web design shop that’s been around and paying taxes for years. Apparently there’s some fine print in the CCR’s about not being able to rent and work from home – another case of a city official with nothing better to do…
If AZ is so interested in engaging in programs that promote growth and development in small business, a good place to start would be to stop f’ing with companies and let them be productive. People are betting their life savings to start a venture, working 15-hr days and gritting it out in an effort to build important things. Entrepreneurs hold the greatest promise of economic growth for AZ – why the heck is City and State so bent on suffocating startups with hoop after senseless hoop? If they’re not going to provide assistance the least they can do is get out of the way. It’s a miracle that small companies succeed in spite of our government.
Anyways, sorry for the rant but this Angel Tax Program is a complete joke. I hate to discourage anyone from trying. It looks great on paper but clearly has some serious fundamental contradictions given its criteria and its stated purpose on the web site.
UPDATE: So I stand corrected on the psychic and history aspects – apparently they’re a state entity asking authorization to federal records for past periods if they exist and pre-auth for the next five years since that’s the time the credit will apply. That’s a little more logical. Five month response time is still messed up though.
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Sean Tierney Mar 2 (4 days ago) to Tiffany XXXXXXXX date Mar 2, 2007 9:53 AM subject Re: JumpBox's Application for Angel Investment Program mailed-by gmail.com Tiffany, wow. I completely forgot about this- we applied on Oct 5th... better late than never I suppose ;-) Answers to your questions inline: > NAICS number 541512 - Computer Systems Design Services > relationship between JamStack, Inc. and JumpBox, Inc. Same entity- it was once called JamStack and we then formally renamed the entity to JumpBox, Inc. Let me know if you need the ammended articles for this. > You indicated Sean Tierney does not receive annual compensation. When do you > anticipate he will begin receiving compensation? In the mean time, does the > company provide worker's compensation and are other employee-related state > and federal provisions being followed? I am Sean Tierney - I provided the initial investment to launch the company and I'm currently the largest shareholder. I was not taking salary at the time this app was submitted however I just recently began drawing a very small salary as we landed some critical investment to advance things. It's puny at this point and merely covering my monthly payment on my HELOC. Yes, we file state and federal taxes and follow all the appropriate provisions. I can give you the Q4 tax papers for both if you need them to verify this. > All applicants must submit a completed Arizona Department of Revenue Form > 285SBI. Your form is not quite complete. To comply with the statutes of > this program, we need to obtain an authorization for release of confidential > information for the tax periods two years proceeding the investment year and > for all years the tax credit is available. This includes the three year > carry forward period. Therefore, please submit a revised form 285SBI and > add 2009, 2010, 2011, and 2012 to the tax periods listed on #4. The form > can be found on the web at > http://www.azcommerce.com/doclib/finance/angel%20285sbi.pdf ? Tiffany, please call _me_ (you guys serve the businesses of AZ, right?). This company is 7 months old. I filled out the form to the best of our ability - if you need more information call me with specifics. It's taken you guys 5mos to read our app Pardon me but do you guys have anyone actually using this program? Hopefully you can understand why it seems like a complete joke from my perspective... > Your application contained the Certificate of Incorporation for JamStack, > Inc, which you identified as your business' previous name. Please provide > the amendment to the Certificate that changed the business name to JumpBox, > Inc or provide JumpBox's own Certificate of Incorporation. see attached > If you have any questions, please feel free to contact me. I look forward > to working with you. Thanks! Tiffany, thanks for your time. Please indicate the specific deficiencies on the application I submitted. We can give you whatever tax papers you request for Q3 and Q4 of 2006. We do not have 3 years of anything to give you because we are a startup that was founded in July. I understand that this Angel Tax credit program is geared towards startups like ourself so I'm not sure how you can seriously expect 3yrs of anything from us- unless I'm misunderstanding what you're asking for... please call me and we'll clarify what remains to qualify us.Sean 602.281.4648
Great post, Sean. Saves me the time from submitting an application for this!
Have you looked into SBA Loans?
I’ve heard mixed things about how hard they are to get, and the kind of hoops one has to jump through to get em.
Wow – I am stunned. Did the application take some research, yes. Did it require some digging? yes. Was the app a pain to find? yes. But after you spent a few hours with it and filled it properly I was certified in less than 4 business days. Letter in hand etc. and investors LOVED IT!!!
If you need help with these contact me – I will gladly pay an intern to fill it out and charge you $2500.
As to you comment about operating history I just disclosed that we were an upstart and no problem. Five year financial projections are standard with any angel anyways – if you don’t have them they will laugh at you. You need to get an accountant and sit down and spend the time and money to create projections (sure they are shots in the dark – but you can’t build anything without a plan). @Derrick
@Derrick – sounds like AZEDC has cleaned up their act in the past 2yrs since we submitted our app (which is nice to hear- they’ve had plenty of time to do it). The wait was nearly half a year when we submitted.
So you’re a brand new startup with no product/sales/anything and you’re paying an accountant to do 5yr projections with the hope of landing Angel? Great use of your money… We’ve dealt with real Angels and the legit ones know that 5yr projections on a day one of a startup are as worthless as the paper they’re written on. They want to see how you think and understand the space, what your track record is, what you can produce and what your go-to-market strategy is.
If you need help making speculative financial projections, contact me and I’ll have my 2yr old niece fingerpaint some and I’ll only charge you half what your accountant is charging you.
sean
[…] but where are the tax credits for local job creation coming from entrepreneurs. Short of the angel tax credit, there isnt […]