Taxing Concerns For Small Business

How Creative Types Fuel the Ecoonomy

Thinking IPO? Think Again

Tax Transfers

Corrections or additions?

This article by Bart Jackson & Kathleen McGinn Spring was prepared for the May 19, 2004 edition of U.S. 1 Newspaper. All rights reserved.

New Manufacturing Diet:Lean & Green Machine

The more you make, the more you sell. The more sell, the richer you grow. So goes the old manufacturer’s maxim. Back when products flowed along conveyor lines driven by leather belts, it was a good one. But today customers have grown more savvy, production rates have soared, and warehousing space is golden. Profits go to those companies that are producing just the right number of widgets, not the most widgets.

Getting the number just right has become an obsession. “Twelve Steps to Lean Manufacturing” is the theme of an upcoming meeting of the Institute of Management Accountants on Wednesday, May 19, at 6 p.m. at Good Time Charley’s in Kingston. Gerry Najarian, founder of the Remington Group, a Research Park-based manufacturers consulting firm, is the speaker. Najarian’s make-more-by-making-less approach provides new working models for those involved in materials handling, and finance as well as actual production.

For the last three decades, Najarian has concentrated on the financial focus of manufacturers. Born in Westchester, New York, Najarian earned a B.A. in accounting from Iona College and an M.A. in finance from the City University of New York. He then joined the finance departments of several major manufacturers. It was as controller of Fleischmann’s Yeast, back in the early 1970s, that the idea of lean production first impressed itself on Najarian. “We were making tons of bakers yeast, which has a shelf life of about one week,” he says. “So we had to arrange our production to have never more than one day’s inventory on hand. The logistics were tough, but it was very efficient.”

Najarian saw more of the financial benefits of a low-inventory system when he became a partner in accounting firm KPMG. In l990 he went out on his own, founding the Remington Group, which is located at 475 Wall Street. His client roster includes C.B. Celco, Sara Lee, Rowan Industries, and Emerson Electronics.

The whole difference between the old “batch mode” production system and lean manufacturing, explains Najarian, is the difference between push and pull. The traditional way to make a product is to push the materials into the shop, push the parts down the assembly line, push them into the warehouse, and then push them on the sales people, who try to place them with customers.

Najarian’s lean method involves letting customer demand pull goods through the line. Production lots are based only on orders, not on capacity. While there is no such thing as zero-base inventory, the buffer of produced goods sitting in the warehouse dwindles to several days-worth, instead of months-worth. Meanwhile the percentage of goods on their way to customers rises. The changeover is a vast, multi-stepped process (“Many more than 12 steps, actually,” he admits.) Moving to lean takes system-wide effort, but it offers many advantages.

Idle hands? The immediate, knee jerk response of most manufacturers to the suggestion that they produce at anything less than full-blast capacity is that they will end up paying workers not to work. They envision skilled assembly line employees slinging mops while they — and their expensive machinery — wait for a fresh sales order. Najarian explains that lean is not more idle, but rather is more efficient.

Workers in the lean plant are continually trained in crossover tasks. They can shift easily to the new job required for the current product. Plants themselves, instead of being laid out according to function, are grouped in what Najarian calls product cells. The old long, straight assembly line where workers stood side by side can be transformed to a U or J shape allowing workers to turn around and shift to different tasks throughout the process. Such multitasking helps open up bottle necks.

“Subassemblies are ideal set ups for bottlenecks,” says Najarian. Pieces get created, then must be stored until the next part of the line is ready. By minimizing specialized parts assemblies in different areas, workers can move to new stations, get the product out faster, and avoid mental fatigue. A 25 percent increase in production comes from such cellular operations, Najarian’s studies show.

Smaller lot size. If a manufacturer wants to produce for his customers, rather than his warehouse, he must be able to switch production rapidly. “The best way to achieve this flexibility,” says Najarian, “is to decrease the lot size; where you once made lots of 1,000, now gear up for lots of 10.”

One major cost saving comes from improved quality. Mistakes are found early and the cost of throwing out only 10 bad items can be relatively painless. Once a plant adopts this rapid product shift, with smaller lot sizes, Najarian’s studies have shown that the cycle times can be reduced by 60 percent.

The issue of materials cost plagues purchasing agents, who like to buy in bulk, which is generally less expensive. But Najarian counters these volume discounts with the advantages of quality, less inspection time, delivery reliability, and more accurate lead times.

Warehousing. The Just-in-Time (JIT) production flow allows for a week’s worth of buffer inventory to be on hand as opposed to the traditional three months of goods, which would lie fallow in storage. The space and cost savings here are obvious, but as crated inventory lessens, other benefits accrue.

Dell Computers, one of the leanest inventory manufacturers, has installed the JIT regime primarily out of necessity. In the world of high technology, six months is ancient and, most likely, obsolete. “If you have 15 models in your warehouse that have fallen beyond the latest life cycle, you are going to be eating a lot of obsolescent costs,” says Najarian.

Make no mistake, with the warehouse empty, shipping and delivery schedules must be infinitely more precise. “Sometime Tuesday” must be replaced with “10:15 a.m. sharp.” Yet once this synchronized flow becomes a discipline, customer service soars, and your fill rates should climb near the 100 percent peak.

Quality. When cell production replaces subassemblies, the tendency to pass mistakes down the line vanishes. Inspection becomes the responsibility of each trained worker on site as it happens. The old model of final inspection after the product is finished is replaced by having each employee catch the error before mass rejection of goods becomes necessary.

As an additional part of the cross-training, each employee is required to become the inspector and maintainer of his machines. Such preventive steps not only keep machine performance, and thus quality, high, but also lessen the probability of costly line stoppages. For the managers, there has to be new focus on an employee’s many roles within the production process.

Forecast and schedule. Lean manufacturing is not a choice made once; nor does it affect only “those guys down in production.” It is a continuing goal in which every individual in the company must be involved. It begins with an enormous amount of forethought, followed by continuous inspection data, leading to continuing adjustment. The plant becomes an athlete. To make itself stronger, it doesn’t just do more pushups. It examines all parts of the body and sees what muscles need work and where it could use a little dieting.

Najarian suggests managers begin by taking specific measurements of such things as make-to-stock schedules, assemble-to-order processes and times, and work-in-process inventory. By tracking these and other trends, executives can determine where change is required.

As a final caveat, Najarian warns that lean manufacturing breeds lower costs, but it can only be achieved over time. This is scarcely a quick fix to make things look good for the next annual report. With a commitment to cut out the fat, however, manufacturers will be assured of a faster, smoother operation producing a higher quality product with happier, more involved workers. From such a formula, all benefits, including cost, must necessarily flow.

— Bart Jackson

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Taxing Concerns For Small Business

The IRS may seem kinder, gentler, and far too swamped to notice your fudged form, but don’t count on that from the state. With a paucity of federal funds, New Jersey is on the hunt for every thin dime from any available source. In this, the merry month of May, thousands of New Jersey firms and individuals may be receiving tax adjustments that typically show a refiguring of the NJ-1040 in the state’s favor. What can your company do about it this year — and next?

The “Small Business Tax Workshop,” offered by the state’s Division of Taxation, offers some answers. The free event takes place on Thursday, May 20, at 9 a.m. at the United Trust Community Center in Plainfield. Call 908-737-5950 to register. Jointly sponsored by the New Jersey Small Business Development Center and the New Jersey Association of Women Business Owners, the workshop features Nick Cocco, head of the Division of Taxation’s outreach program. He covers such issues as how to register a small business; employee withholding; income made out of state; sales tax; and estimated payments.

Cocco points out that this Small Business Tax Workshop is one of a series, and that it has no counterpart in the IRS. To find out the time of these and other workshops, along with the latest in Garden State tax legislation and services, visit www.state.NJ.US/Treasury/Taxation.

“Our state’s tax system seems so logical and straightforward,” says veteran tax accountant Robert Geer, “but it’s really not.” Geer filled out his first tax form in l979 when, as a CPA, he opened up his own office in Princeton. Since then he has moved to Thompson Court (195 Nassau Street) and guided thousands of New Jersey small and mid-size firms and individuals through the intricacies of the state tax tables. No matter what sort of ownership set up your company has, a little forethought, says Geer, can make your tax bill smaller — and less of a surprise.

Sole proprietorship. The man standing alone in the business world will almost invariably find himself the least tax sheltered. The individual in business for himself pays the full 15.3 percent of his Social Security tax, unlike the employee, who shares this burden with his employer. It is not unusual for the sole proprietor, by the time he is finished with federal, state, Social Security and various usage taxes to pay 40 percent — or even 50 percent of his income — in taxes. So, declaring yourself a sole proprietor is a worthwhile move only if you have ample deductions for schedule C.

Additionally, sole proprietors are not required to purchase a federal ID number. However, without this number most banks will not give your business a loan — or even let it open an account. The best way around this, Geer advises, is to register with the county.

The main headache comes when the business earns income from two or more states. If you earn 22 percent of your income in New York and the rest in your residential state of New Jersey, you are required to fill out both the NJ 1040 and a non-residential tax form for the Empire State — and maybe even the city. You do get a tax credit on your New Jersey form for that 22 percent paid to New York. So it almost evens out. Almost, because, New Jersey only refunds at its own rate of taxation. Thus you get credited with your out-of-state income times the percentage of your resident state.

The primary tax safeguard for everyone from the lone business person to the multi-employee corporation is to set aside a separate, amply-funded tax account. One of the biggest tax shocks comes to the one-person shop which takes on employees and suddenly must deal with periodic withholding payments. Neither the state nor the IRS has warm feelings toward businesses that default on payroll deductions. These funds, most of which are eventually managed by the Department of Labor, are seen as being held in trust for the salaried employees. Not having the cash ready for the tax divisions is viewed as theft.

Partnerships. This oldest of business arrangements was just hit with a recent Garden State tax that is killing many professional groups. Currently, every partnership of three participants or more must pay a $150 per person filing fee, annually. For the hundred-partner law or investment firm, this adds up. “For that reason,” says Geer notes, “you are seeing a lot of the law and CPA partnerships dry up and transform into Limited Liability Corporations LLCs).”

Yet the last three years have not been all bad for partners. Investment clubs are now exempt from the $150 filing fee. Also, domestic partners (not just spouses) can transfer funds with no tax. Under certain circumstances, one can even become the dependent of the other and claim a $1,000 exemption. Businesses and business entities can now perform this no-tax transactions. And if these partners or entities share 80 percent or more of each other’s assets, they can sell to each other with no sales or use tax.

The partnership requires one of the more rigorous methods of filing for the small business person. First, the company must file the standard federal and NJ 1065 forms. Geer calls these as “pass through forms” because their information is passed through to each partner’s individual K-1 form. If you are just an investing partner, the paperwork can be excruciatingly Byzantine and a specialized partnership accountant will save both funds and sleepless nights.

Incorporation. Many professionals have wrestled with the option of incorporating to take advantage of the lower tax rates. In New Jersey, the corporation pays a minimum of $550 a year in taxes: $50 to the Secretary of State as a records fee, and $500 annually for the minimum state tax. Depending on profits, Garden State corporations pay a 7.5 to 9 percent tax rate, with most small and mid-size companies paying about 7.5 percent.

This seems enticing compared with the percentages paid by the sole proprietorship. However, there are several less appealing features to the tax treatment corporations receive. Registration and other fees frequently make incorporating a financial burden for the sole professional with a few employees. Additionally, the corporate employer must register with the state and pay SUI (unemployment) and DUI (medical) insurances.

A corporation is actually a legal fiction that allows a group of people personal immunity from certain laws while transacting business under a specific name. But increasingly, American courts are interpreting the “INC.” less as an entity, and more as a group of accountable individuals. For example, individual board members whose company has been chronically sluggish in delivering payroll withholding, or has broken environmental laws, now face individual fines and serious jail time.

Additionally, a corporation is a state-granted, not federal, entity. You must pay the annual registration fees and taxes in every state in which you do business. In New Jersey, the recent Lanco Inc. vs Director (of NJ Taxation) case ruled that a corporation with no physical presence in the state does not have to pay corporate tax. The case is under appeal and the legal concept of whether selling constitutes a physical presence is still up in the air. It is best to check www.state.NJ.US/treasury/taxation for updates.

New laws. As ever, New Jersey fine tunes its tax laws with a flourish of new legislation. Fees are going up. Permission for everything from engineering and real estate, to fingerprinting and background checks now cost more. Whether you operate a mental health facility or a limousine service, expect higher registration fees. But along with it, there are expanded exemptions. Domestic partners qualify for several new benefits. Corporations can take as much as 100 percent of their environmental cleanups as tax deductions.

Yet the most timely change for many comes in the form of paperwork. For those in tax payment or filing arrears, New Jersey is collapsing its two-notification system into a single letter. Instead of the old first notice: the “Statement of Account,” followed by a second demand for payment, those who owe the state tax revenue will receive a single bill. This bill shows two payments for two dates. The first date’s payment includes the additional tax, plus interest, plus a late filing fee of 5 percent per month, up to 25 per cent, if applicable. The second date embraces all of the above and tacks on another 5 percent late penalty.

So can you protest that adjusted bill when this first-and-only letter lands on your desk? Yes. But you had better voice your complaint swiftly. For in the world, of taxes, time is money.

— Bart Jackson

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How Creative Types Fuel the Ecoonomy

Richard Florida is a Carnegie Mellon professor, the author of best selling book, “The Rise of the Creative Class,” and a little industry all of his own. Declaring that the keys to economic growth are gays, bohemians, and rock bands has made him wildly popular. According to his PR person, he is way too busy for media interviews. Audiences are clamoring for him, and he spends his days criss-crossing the continent meeting the need.

One such stop is taking him to Crossroads Theater in New Brunswick on Thursday, May 20, at 1 p.m. His talk and book signing, sponsored by ArtPride, is free but reservations are required. Call 609-443-3582 to make one.

Florida is coming close to home for this appearance. He grew up in Newark, the son of a factory worker, and earned his undergraduate degree from Rutgers before doing graduate studies at Columbia.

Florida’s website ( features a number of downloadable photos of himself — mostly in sandals and sunglasses, and sometimes in a bike helmet. He has a staff, at least one member of which is pictured on the website grinning and wobbling on a pretty small slab of concrete 14 stories in the air.

The website images are keyed into his message. In a nutshell, it is that we as a nation are moving toward creative work — fun work — that can be done anywhere, at any hour of the day or night, in any garb. This creative work is so beneficial to the economies of municipalities, and indeed to the country as a whole, that it is the force that will make an economy hum.

Locales that want to boom can forget about courting companies. Court people instead, says Florida. Snag the good ones, and companies will follow. The game has changed; towns of all sizes need to be making themselves over as creative-friendly communities — and they had darn well better be fun places to hang. Stop wasting money on sports stadiums, Florida preaches, and start working on bike trails, ultimate frisbee venues, and quaint historic districts.

One caveat: This fun has to be inclusive. During the course of his research, Florida has found that creative workers — a group that labors at most kinds of knowledge work, including software design, writing, law, and film making — like diversity. They want to work and live in communities with a high degree of tolerance. To test for this atmosphere, he says, look for gay people. He calls them the “canaries” of the creative class. Where gays cluster, creatives of all sexual persuasions will flock. A reason for this phenomenon, in his opinion, is that the presence of a thriving gay community signals both tolerance and safety. It appeals to bohemians, whom he defines as artists, musicians, novelists, and their ilk, and also to single professional women.

Not everyone agrees with Florida’s philosophy. An article in the City Journal, a publication of conservative think tank the Manhattan Institute titled “The Curse of the Creative Class,” states that “the basic economics behind his (Florida’s) ideas don’t work.” The lengthy article concludes that Florida is extrapolating from the brief boom and glorifying its foosball culture.

“Many municipal officials during those heady years suddenly found their cities populated with youthful entrepreneurs whose new companies had struck it rich in the stock market or with venture capitalists,” writes Steven Malanga, the article’s author. “These Internet kids, largely playing with other people’s money, sought to move their hot businesses into cool neighborhoods with architecturally rich traditions, where they installed basketball courts in their new offices, held meetings with their dogs prancing about, and hired young, single workers like themselves, who worried more about a city’s music scene than its personal income tax rates.”

Florida saw a causal relationship between youthful fun and economic boom. Perhaps the relationship is not as strong as he insists that it is, but it can not be denied that the nature of work is changing, and that lifestyles may well follow. Creative workers now make up 33 percent of the labor force in this country, up 10 percent from the 1980s, according to Florida’s analysis.

Just about one year ago, a summit of those interested in creating creative-friendly communities convened in Memphis. The “Memphis Manifesto,” an outline for nurturing a new type of environment emerged. A “call to action,” it states that it is essential to do the following:

Cultivate and reward creativity. Everyone is part of the value chain of creativity. Creativity can happen at any time, anywhere, and it’s happening in your community right now. Pay attention.

Invest in the creative ecosystem. The creative ecosystem can include arts and culture, nightlife, the music scene, restaurants, artists and designers, innovators, entrepreneurs, affordable spaces, lively neighborhoods, spirituality, education, density, public spaces, and third places, such as coffee houses, which are neither home nor work, but are comfortable venues for getting work done or meeting friends.

Embrace diversity. It gives birth to creativity, innovation, and positive economic impact. People of different backgrounds and experiences contribute a diversity of ides, expressions, talents, and perspectives that enrich communities. This is how ideas flourish and build vital communities

Nurture the creatives. Support the connectors. Collaborate to compete in a new way and get everyone in the game.

Value risk-taking. Convert a “no” climate into a “yes” climate. Invest in opportunity-making, not just problem-solving. Tap into the creative talent, technology, and energy for your community. Challenge conventional wisdom.

Be authentic. Identify the value you add and focus on those assets where you can be unique. Dare to be different, not simply the look-alike of another community. Resist mono-culture and homogeneity. Every community can be the right community.

Invest in and build on quality of place. While inherited features such as climate, natural resources, and population are important, other critical features such as arts and culture, open and green spaces, vibrant downtowns, and centers of learning can be built and strengthened. This will make communities more competitive than ever because it will create more opportunities than ever for ideas to have an impact.

Remove barriers to creativity. Work at eradicating mediocrity, intolerance, disconnectedness, sprawl, poverty, bad schools, exclusivity, and social and environmental degradation.

Take responsibility for change in your community. Improvise. Make things happen. Development is a “do it yourself” enterprise.

Ensure that all people, and especially children, have the right to creativity. The highest quality of lifelong education is critical to developing and retaining creative individuals as a resource for communities. Accept the responsibility to be the stewards of creativity in our communities. Understand that the ideas and principles in this document may be adapted to reflect a community’s unique needs and assets.

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Thinking IPO? Think Again

You’ve made it! Despite a venture capital drought and cut throat competition, your firm is ascending. It has found a profitable niche and is running with it. You are actually thinking of — gulp — going public. The door to the public markets has been all but nailed shut for the better part of three years, but you think you see an opening.

Find out whether this option is feasible at a workshop for entrepreneurs sponsored by Silicon Garden + Angels, and a luncheon sponsored by the New Jersey Entrepreneurs Forum, both on Wednesday, May 26, at the New Brunswick Hyatt. For the 8 a.m. workshop, call 732-873-1955. For the $50 luncheon at 11:30 a.m., call 908-789-3424 or visit Speakers include Dan Conley, founder of entrepreneurial resource firms NJ and Silicon; and Gary Bingel and Bill Stickney, CPAs with Smart Associates ( in Devon, Pennsylvania; and Charles Savage of Casimir Capital.

Among Conley’s current projects is Research Park-based NovaFlux, a company that has invented a method of cleaning medical devices ( M. Labib of Princeton Trade and Technology has invented a machine that fires droplets of a special detergent and water at medical instruments at hundreds of miles per hour, stripping off the entire biofilm.

“This is exactly the sort of thing I like to get behind,” says Conley. A native of Belmont, Massachusetts, Conley went west at age 18, started college, then dropped out to spend four years “doing Radar O’Riley type things in the Marines.” He then returned to his home state and enrolled in the University of Massachusetts, where he earned a B.A. in information systems and, at the same time, managed to push a bill giving all 27 college student government bodies legal status through the state legislature.

Today he is — in his own terms — a virtual corporation under such names as Silicon, NJ, and Each of these entities guides and finds financing for start up firms, most of them in the area of high tech. “The majority of our time is spent helping the entrepreneurs get past ‘No,’ because that is all they hear,” he laughs.

Conley is not necessarily a fan of growing a company by taking it public. A public offering, in his view, should never be seen as a natural step or a status sign. He says, however, that any company contemplating this move should look at the full range of consequences, and should consider which of several methods of going public is the best choice.

Conley unfurls a list of disadvantages to all entrepreneurs eager to go. First is the problem of total disclosure. Do not think that just because you have acted honorably and kept proper books that you are home free here. In addition to the work involved in preparing voluminous disclosure documents, you face the danger inherent in releasing very valuable materials — on everything from technical data to market share — to your competitors. You may be literally enticing a competitor to bring out his new line against yours.

Secondly, Conley points out that the costs to file and to continually update materials are invariably beyond estimation. Even in a small operation it will take a few people working full time to organize the various legal requirements and keep the investment records.

But probably the factor that most entrepreneurs find most disagreeable is that by shifting into the public investment arena, they are inviting a whole lot of people into a business that formerly was their private preserve. Inevitably, a number of these people will not think the way they do.

“Most entrepreneurs are mavericks who got here by thinking out of the box,” says Conley. “Now they have to cram back into that box. They surrender major responsibility to a phalanx of executives who really know how to fly a desk, but just don’t understand the entrepreneur.”

Recently Conley consulted with Diagnostics, a Medford, Long Island, firm that had developed a quick, home-use test strip for HIV and tuberculosis. This was an important invention, but it alone was not enough to merit a run at the public markets. It really gathered momentum when it landed several major contracts in South and Central America, including a multi-year $3.5 million agreement with Brazil, which includes royalties, licensing, and the establishment of a factory. At this point, the original investors wanted the company to go public, thinking that they would be happy to put up more cash if they could have the option of pulling out any time, which is generally the case with an investment in a public company.

Describing three methods of going public, Conley says, any of them could prevent the stock issue from becoming a volleyball for the major investment bankers and their cronies:

Direct offering. This was the option chosen by the Boston Celtics in an attempt to increase investment capital on several levels. The team owners basically offered each season ticket holder the opportunity of becoming a stockholder. It proved to be a clever choice. Fans were encouraged to become more fanatical. Seasons tickets in effect became shares, passed on to family members. And while this is not a wholly public offering, the chances of stock manipulation are kept low.

The Auction. Any day now, the media keeps assuring us, search engine giant Google is going to offer shares of stock at auction. “This is the purest, and in many ways best, form of public offering,” says Conley. The market alone will set the price. The investment bankers are unable to buy up large chunks of the initial stock, and then, in a flourish of publicity, boost the issue’s price as everyone is convinced to jump on board this high flyer.

The reverse merger, sometimes called “the shell game,” though not by Conley. An opportunity has come out of the collapse of all those high flying companies. It is possible to go into the wreckage of the corporate shells that have washed up on the harsh shores of Chapter 11 and from them pluck legal access to a stock exchange. The defunct companies have no product, but they do have all the paperwork and infrastructure for issuing stock on a public exchange.

This was the route taken by, now trading as TSUN on the Over The Counter bulletin board. The company engineered a reverse merger with a cratered high tech firm, bringing in its own assets, and using the route established by the fallen company to issue stock. should glean more than enough from its public offering to see its product through FDA tests and bring it back to the United States. But the entrepreneur choosing this route will spend a less time in the lab and more time putting out fires from his desk. On the other hand, a life saving product may reach a great many more people.

— Bart Jackson

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Tax Transfers

The application deadline is June 30 for $40 million in 2004 funding available to high-technology and biotechnology businesses through New Jersey’s popular Technology Business Tax Certificate Transfer Program.

Now in its sixth year, the competitive program enables qualified technology companies to raise cash to finance their growth and operations by selling tax losses or research and development credits to other profitable New Jersey corporations for at least 75 percent of their value. It is administered by the New Jersey Economic Development Authority (NJEDA) in conjunction with the New Jersey Division of Taxation and the New Jersey Commission on Science and Technology.

A record 189 companies were approved last year to share the $40 million made available annually, the program’s fifth straight year of increasing participation. Approvals of the 2004 participants will be announced in the early fall.

Said EDA CEO Caren S. Franzini in a prepared statement: “The governor has proposed adding $20 million to the program to help high-tech and biotech firms during the crucial stage of their development. Half of these new monies would be directed to participating companies located within the newly proposed Innovation Zones in Camden, Newark, and New/North Brunswick.”

To be eligible for the tax certificate program, a company must be a new or expanding technology or biotechnology business with a maximum of 225 employees that bases at least 75 percent of its workforce in New Jersey.

Businesses selling unused net operating losses (NOLs) or research and development tax credits are able to use the money they receive to finance business expenses including the purchase of equipment, facility expansions or working capital.

Companies can apply more than once for assistance through the program subject to a total lifetime cap of $10 million. Companies purchasing NOLs or tax credits must do a portion of their business in New Jersey.

Applications are reviewed by the Division of Taxation to establish the value of the tax loss or tax credit benefit. The Commission on Science and Technology reviews the applications for technology qualifications. The EDA makes the final determination on eligibility. When an application is approved, a certificate is issued that identifies the value of the tax benefit being exchanged and transfers it from the selling to the buying company. A total of $210 million has been approved under the program for high-tech and biotech companies.

To download an application, visit and look for “Helpful Tools” along the left side of the home page. Click on “Online Applications,” then scroll down and click again on “Tax Certificate Transfer Program, New Applicants Selling Business Application.”

For more information about the Technology Business Tax Certificate Transfer Program or other lending programs, visit, call the EDA’s business lending division at 609-292-0181, or E-mail to

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