Published December 17, 2019
There are a few advantages and opportunities for opening a business catering to Native American communities. By following the guide below, you will learn all about the things you need to consider such as tribal law, the differences in tax law, and tribal authority.
This guide is for people who are wanting to operate their business on tribal lands, or for Native Americans who want to open their own business.
Economic Incentives
Setting up in business can seem daunting, especially if you’re thinking of starting up in an area that is deprived. It’s important that you make sure that you’ve done your research and found out how to stop your business from going under. One important tip is to make sure that your bills aren’t too high. This includes tax bills, electricity bills and mortgages. To make sure you get the best deals on your business gas rates, visit a comparison site like Utility Bidder.
In response to the huge inequalities faced in the past, Native American governments have acquired some benefits and incentives to encourage growth within their community. Entrepreneurs, both non-tribal and tribal members are able to use these economic incentives in order to cut the costs of start-up on tribal lands. Below are some of the incentives available to businesses starting up on tribal lands:
- Special depreciation rules – A business that is located on tribal lands is under special rules that allow fast depreciation. A business property will depreciate faster, which means that when you calculate your asset-based taxes over time, your business will save money. Your property has to meet these conditions in order to qualify – used mainly to operate a business within a reservation; the business is not located beyond the reservation on a regular basis; you must not buy the premises off a person who is a relative of the taxpayer (this can be through inheritance, sale or gift); your business doesn’t conduct gaming activities.
- Indian Employment Credit – If you hire tribe members on tribal land, then there are some other additional benefits available to you. This benefit is known as Indian Employment Credit. Tax credits may be given to employers towards an employee’s wages (up to $20,000), or healthcare benefits. For business owners to qualify for this, they must live within the reservation and perform most of their jobs within this area. An employee whose spouse is a tribe member can also qualify for this benefit.
- New Market Tax Credit – Your business may have access to New Market Tax Credit if you invest within a certain area. Many business projects that operate within tribal lands will qualify for this credit. If your business invests in the local community or creates jobs, then you may be able to receive a federal tax break. This credit is a little harder to claim, but it is well worth a try as any qualifying business can receive a 39% tax break.
Tribal Member Entrepreneurs
Tribal members have some extra advantages that are not available to non-tribal members. One of the main differences is that the government is not allowed to tax any income from tribal members if the business they are working for started from within tribal lands. This includes both property taxes and income taxes. Not only this, but there may also be differences in qualifications for third-party and government programmes that are built to enable and empower American Indian entrepreneurs.
Tribal Governments
Tribal territories are self-governed by tribal governments. This includes, among other things, the chance to regulate and tax businesses that are located on tribal lands. It is important that you do your research, as there may be significant differences between different tribal governments. Important things to think about include:
- Regulations imposed by tribal governments
- Taxes imposed by tribal governments
- Standards set by tribal governments
- Property laws surrounding tribal lands that aren’t trusted
Some tribal governments choose to offer tax-exempt bonds to businesses who perform social welfare activities or essential administrative functions.
Many tribal governments will also provide finance for manufacturing facilities with tax-exemption bonds as long as they meet the following criteria:
- 95% of the profit of the bonds goes to construction, acquisition or improvement of the facility
- 95% of the profit is put towards other businesses located on tribal lands that are operated and owned by the tribe who issues the bond
- The total of the tax-exempt bonds that are funding the facility do not go above 20 times the salary paid by the business within a year (this starts two years after the bond begins).
There are lots of benefits to setting up your business within tribal lands. It’s important that you work alongside and cooperate with tribal authorities in order for your business to grow and to benefit the local community. The most important thing is to do your research before you begin.
The post Opening a Business on Native American Land appeared first on Native News Online.
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