The team at BNE looks forward to updating this publication each year. Next to our relocation guide, its one of our most popular tools. For 2013, we expanded the publication and added information about incentives, workforce development programs, r&d expenditures, patents, and more.
Don’t hesitate to contact us if you have feedback or recommendations regarding how we can enhance and improve the information in the economic guide.
Buffalo Niagara benefits from its prime location in the center of an internationally significant regional community and market place extending over 3,700 square miles from Toronto, ON to Rochester, NY and home to 3.2 million people. Because of its unique bi-national location, local businesses have the expertise and experience to help international businesses expand to the U.S. -and the region- successfully and avoid pitfalls. View BNE’s Canadian Resources for more tips on banking, immigration, human resources and accounting practices.
Guest Blog – Freed Maxick International
Are you a Canadian “snowbird” spending winters in the United States? You may not realize it, but you could be considered a U.S. tax resident. If this is the case, the basis on which tax residency is determined is through the IRS “Substantial Presence Test.”
For this purpose, you will be considered a U.S. tax resident if you meet the following requirements:
If you fall into this category, don’t panic! There is potential relief available to Canadian citizens that are caught by this Substantial Presence Test:
Are there exceptions to the rule?
There are exceptions to the substantial presence test. The following are a few examples:
The term “exempt individual” does not refer to someone exempt from U.S. taxes, but to anyone that claims exemption from counting days of presence in the United States. For example- a teacher or trainee temporarily in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa. For a full list of exemptions and exceptions, please refer to the IRS substantial presence test.
What should you do next?
If you exclude days of presence in the United States because you fall under a special category, you must file Form 8840 (Closer Connection Statement) or Form 8843 (Statement of exempt individuals and individuals with a medical condition).
Freed Maxick International tax practice professionals can help you determine if you qualify as a U.S. tax resident, and assist you with Substantial Presence Test filings. We can navigate the IRS guidelines and minimize potential penalties. Contact us to connect with our experts.
Galvstar LLC talks about why they decided to open their new steel coating line in Buffalo, NY. 2:38 minute video.
Click here for more information on manufacturing opportunities in the Buffalo Niagara region.
by Tom Kucharski, President & CEO
Last fall talked about shovel ready sites and the impact that this designation of real estate development had on BNE’s economic development attraction efforts, primarily outside our urban core. This month I would like to share some thoughts on the past, present and proposed development in downtown Buffalo.
Longtime residents or newcomers to our community might very well be surprised to learn that over the last decade 83 different development projects have successfully been completed in downtown Buffalo. Covering a wide array of uses ranging from office and mixed use to commercial, residential, tourism and research & development space, these new structures are distributed across the geography of our central business district, the Buffalo Niagara Medical Campus, the Canalside/Waterfront district, the Larkin District and the fruit Belt Infill & Redevelopment area. Just as remarkable is the more than $1.3 billion of investment associated with these projects in what can accurately be depicted as an impressive resurgence of development in New York State’s second largest city.
In both real estate and economic development, new potential investment often follows prior investment. This dynamic is supported by the additional 20 development projects currently under construction in the city limits that represent an approximate investment of $339.7 million. But it doesn’t end there. Another 29 proposed projects are in the early stages of the development process representing an additional minimal investment of $577.5 million across the City of Buffalo. So what can we discern from all of this development completed, underway and in the pipeline?
First, smart business people with money to invest (a rare thing in a lingering recession) are betting that our region is a good place to invest their hard earned dollars. Developers and companies considering expansion are extremely risk averse. The fact that so many projects with such large price tags are in, underway or contemplated for downtown Buffalo is a tremendous message to the economic development industry outside our community. It speaks to the legitimacy of our potential in targeted industries like life sciences, advanced manufacturing, advanced business services and tourism/hospitality. It is a compelling story that BNE tells as part of our marketing and business development outreach efforts and it is well received by our audience.
With this type of success come new challenges, some of which were revealed in the 2012-2013 Annual Market View presented by CBRE Buffalo. This comprehensive review of four key commercial segments showed declining vacancy rates in office and industrial space. These two markets share a cyclical cause and effect relationship with BNE. If we succeed in our mission, available real estate comes off the market. In order to succeed in our mission, we need available office and industrial space on the market.
Growth in the expanding health care industry is contributing to the increased absorption in office space, an encouraging sign for the region’s life sciences industry and our attraction efforts there. Even with the exodus of major tenants from the 38-story One HSBC Center, office space is not expected to be as plentiful as it has been in recent years. The 9.3 percent vacancy rate in our central business district is well below the national office rate of 15.5 percent. Our ability to successfully place prospects into desired office space will be directly impacted by how quickly current and proposed projects come on line, and to what degree the trend of renovating older and historic buildings in the city continues.
Even more challenging to our attraction efforts is the steep drop in the industrial vacancy rate which is compounded by the fact that no new industrial space is anticipated to come on the market for at least the next twelve months. That means companies who don’t have the time or the resources to build new may find it difficult to accommodate their needs in the pool of space remaining. Despite all the new development I referenced earlier, new industrial construction would be a great addition to our tool-kit.
The degree of downtown development in a community is a widely considered variable in the economic development and site selection industries. So much so that the development maps we maintain on our BNE website have become vital pieces of the marketing collaterals we provide to our client prospects. To get a better sense of the downtown/economic development in our community, check out our two new updated maps, one that identifies these projects based on the various stages of their completion, and the other that identifies these investments by their industry type.
By Matthew Hubacher, Research Specialist
In his recent State of the Union address, President Barack Obama presented several strategies aimed at strengthening the nation’s economy and creating new jobs for the millions of Americans who continue to struggle to find work. One specific initiative cited by the President was the creation of manufacturing innovation institutes that will provide workforce training and development.
Among the most cited concerns from manufacturers who seek to hire new workers is the persistent skills gap – the difference between the skills possessed by a prospective worker and the skills needed to fulfill the duties and responsibilities of an existing job opening – that exists across the economy, and is particularly acute in the manufacturing sector. This mismatch of training and education makes it extremely difficult for low-skilled workers to find and retain employment in a 21st Century economy, particularly in manufacturing where technical skills are at a premium.
Western New York is leading the way in developing an innovative manufacturing hub where local workers can hone and learn new skills, which will ensure that the local workforce has the training for jobs in growing subsectors within manufacturing. As part of Governor Andrew Cuomo’s Buffalo Billion promise, the Western New York Regional Council, with assistance from researchers from McKinsey & Company, Brookings Institution, UB Regional Institute and Buffalo Niagara Enterprise, conducted an exhaustive review of value-added interventions that will assist the region’s workforce for the jobs of tomorrow.
Among the several innovative strategies outlined in the Regional Council’s Buffalo Billion Investment Development Plan is the creation of a state-of-the-art facility to support the region’s manufacturing sector. The proposed facility, the Buffalo Niagara Institute for Advanced Manufacturing Competitiveness, would provide services to local manufacturers in four specific areas: applied research and development, process excellence, export assistance and workforce training. Specifically around workforce development, the Institute would work with manufacturers to “upskill” their workforce to perform operations that are more complex by utilizing shared equipment to provide hands-on instruction to help early and mid-career workers learn the tasks demanded by advanced manufacturing processes. This targeted manufacturing workforce development initiative is in addition to general proposals by the Regional Council to align training, skills and education in the labor force at large.
Buffalo Niagara is one step ahead when it comes to preparing our workers for the jobs of the 21st Century. With the leadership of the WNY Regional Development Council and the support of Governor Cuomo, Buffalo Niagara will remain a region that “Works.”
Guest Blog: Bank of America
Marshall McLuhan, Canadian educator, writer, and social reformer of the early 20th century said: “Money is just the poor man’s credit card.” Today, credit cards and their vast applications are so much more. They are an essential form of trade for many businesses, an excellent source of reward points and rebate programs and a guaranteed method of immediate collections.
Accepting credit cards from business to business represents one of the fastest growing channels of e-commerce today. A handful of elite Merchant Credit Card Processors can provide business to business card acceptance in both Canada and the United States on a single entry platform. Funds can be deposited into the firm’s Canadian and/or U.S. dollar bank accounts in the respective domestic currency. Having the flexibility to identify which currency should be applied to the sale can both optimize foreign exchange gains and minimize trading risks on the currency fluctuation. This methodology is applicable to business to business transactions only and is used in a card not present environment (such as telephone or internet orders).
For more sophisticated global merchant processors, this single entry, multi-national platform is not only applicable to Canada and the U.S., but countries in Europe and Asia as well, depending on their international reach. It should be noted that the more traditional retail business, where the card is present and the transaction occurs in person between the merchant and the consumer, still requires dual entry platforms, and in most cases, separate country processors under the current MasterCard and Visa Operating Agreements.
Using a card on your payment side can be as efficient as using it on the receipt side. Are you still paying your vendors by check? Are your employees submitting expense reports for reimbursement?
• Corporate Purchasing Cards offer an all-in-one solution that can help increase your purchasing power, reduce costs associated with routine business purchases and streamline your reporting and accounts payable activities. As an added benefit, most programs come with rewards attached.
Do you have an overseas operation? Staff who regularly travel abroad for extended period of time?
• Global Travel and Purchasing Cards are an easy to use card solution, with a powerful reach. This solution offers simplified processing and robust reporting capabilities, helping to gain greater control over your travel and procurement expenses throughout the world.
• Global card programs offer the flexibility of transacting and settling in local currencies to minimize foreign exchange expense.
Whether your firm accepts card, uses card, or both, there are several great opportunities to increase efficiency, maximize program rebates and minimize foreign exchange uncertainties. Global Card Platforms and Global Card Programs represent an excellent channel for all multi-national firms to embrace as they reach beyond their own border.
To discuss Bank of America’s global reach, please contact:
Joanne Campagna, Senior Vice President
716-847-4120; joanne.m.campagna@baml.com
Cindi Seaman, Senior Vice President
716-847-7391; cynthia.seaman@baml.com
Tom Kucharski, President & CEO, Buffalo Niagara Enterprise
An April 2012 report published by the Metropolitan Policy Program at Brookings examines a resurgence that some are calling the “manufacturing moment” from the standpoint of its staying power and geography. Elements of that report, combined with BNE’s experience, reinforce my belief that the commitment of public and private resources in this sector will produce growth opportunities for our region.
As the Brookings report confirms there has been in recent years a re-shoring of manufacturing by U.S. companies, driven in part by growing wage scales in emerging countries. Mid-western states in particular have seen an increase in machinery and auto manufacturing. While the advanced manufacturing in our region has been very diversified, we have seen trends in steel and steel processing, packaging and opportunities for high tech manufacturing.
While the mid-west has experienced more of this re-shoring to date, northeastern states and regions have compelling assets and are developing tools that are growing their competitive advantage. Consider some of these examples in our state and region:
Our growing competitive advantages run much deeper and include our strong supply chain, work ethic and manufacturing heritage. So if this manufacturing moment exists, as we think it does, what are we doing to take advantage of it?
Advanced manufacturing is one of six key strategies in Governor Andrew Cuomo’s billion dollar commitment to Buffalo. It will be supported by the development of the state-of-the-art Buffalo Niagara Institute for Advanced Manufacturing Competitiveness. The institute will focus on applied research services and workforce training while providing export assistance and services to develop process excellence.
In our current fiscal BNE anticipates spending in excess of $70,000 on a very targeted advanced manufacturing campaign consisting of advertising & public relations, direct mail, e-communications, events in Canada and the development of new advanced manufacturing mini-site hosted on our website. Specific companies are being targeted based on their size, geographic location and product.
Our public partners across all eight counties continue to commit significant resources to the development of sites for us to market to our targets. This is one of the most important contributions the public sector can make to the success of attracting manufacturing opportunities to our region.
Is the moment real and will these efforts be worthwhile? Only time will tell. Since our inception BNE has supported 89 advanced manufacturing project wins that have created and retained over 12,000 jobs while investing more than $1.4 billion in our region. The direct and indirect economic impact from only 12 of these projects that have come to our community since 2010 is $607.9 million. The potential that exists and the impact of the results have me convinced that manufacturing will be an important part of our future economic success.
Tom Kucharski, President & CEO, Buffalo Niagara Enterprise
It was the first week of January 2012 and our community, still brimming with excitement from receiving $100.3 million through the state’s regional economic development process and the announcement of a $375 million SUNY 2020 Challenge Grant, learned from Governor Cuomo in his State of the State Address that he was making an unprecedented commitment of $1 billion in state economic development assistance for Buffalo.
Fast forward through 11 months of research, data collection and analysis, collaborative planning and strategizing, and Governor Cuomo came to town last week to unveil the plan that will guide the state’s investment in our region. I am optimistic about the plan that was announced and the long term impact it can have on our community. I am also excited by the role I see Buffalo Niagara Enterprise playing in ensuring the success of the plan.
The six strategies interwoven into the development plan include three high potential targeted industry clusters and three key enablers important to ensuring the success of the new economy in each priority cluster. Investments in life sciences, manufacturing and tourism sectors will be supported by investments in workforce, entrepreneurship and revitalization. I applaud the strategy developed because I believe it wisely avoids the temptation to use large sums of public resources trying to win one or two “blockbuster” deals. Instead it utilizes the state’s commitment to build a foundation and an infrastructure that will invite outside investment and enhance the development of our existing growth opportunities. The Governor’s commitment of resources is over a five year period. The plan is looking to create an impact for the next twenty-five years.
Each strategy rolled out has a specific initiative that has been identified for the first wave of investment, and a number of talented and dedicated individuals have been selected to work on the implementation of these spending initiatives. I was impressed by the significant number of Cuomo administration commissioners who were present at the announcement of the plan and participated in the bus tour of the region later that day. These state agencies will play meaningful roles in implementing the strategies ad initiatives contained in the plan. The fact that Governor brought them to Buffalo not only to hear the plan, but to see firsthand where it will be implemented is a very clear statement to our community and everyone in his administration that he is serious about making a transformational impact on our upstate economy.
BNE’s involvement in the Buffalo Billion included my participation as a member of the Western New York Regional Economic Development Council and our research department’s early work with the Brookings Institute, but I see even more work and more opportunities ahead for us. Aggressive marketing outreach will be required to inform the marketplace of the new initiatives being developed while more research will be necessary to identify the most appropriate targets for this message. Focused business attraction efforts will be necessary to successfully attract the companies and talent that will make use of the infrastructure being built while applying the resources available. With 13 years of successful economic development and relationship building under our belt, Buffalo Niagara Enterprise is well prepared and very excited to join with our long time partners in state government to meet this new challenge head on.
Tom Kucharski, President & CEO, Buffalo Niagara Enterprise
While understanding the constant refrain of jobs, jobs, jobs in our state and national elections, I found it curious the limited discussion about education and the important role it plays in economic development.
Colleges and universities are economic drivers by virtue of their own employment and the economic impact their student and faculty populations have on surrounding communities. The twenty-three colleges and universities throughout Western New York have an economic impact of $3.2 billion on our region with $2 billion of that figure coming in the form of direct institutional spending. There are approximately 32,000 full and part-time jobs at these institutions that generate $122 million in local and state taxes. But the role higher education plays in economic development is much deeper than even these impressive numbers.
For the last several years now universities and higher education systems have been taking leadership roles in state and regional economic development efforts. As predicted by a 2010 study by the Rockefeller Institute, this trend has continued as our nation and world move deeper into the innovation economy. Research and the practical experience of economic development organizations like the BNE have found that the importance of innovation – the development and distribution of knowledge – is in many cases more important than traditional economic incentives.
Since 2007, twenty-three business expansion, investment and job creating opportunities that BNE worked with were actively seeking collaborations with higher education institutions. In addition to their departments and programs, these institutions have infrastructures in place to support these opportunities with everything from physical space and consulting services to providing funding to support research and access to seed monies to accelerate commercialization. Examples include the New York State Center of Excellence (COE) in Bioinformatics & Life Sciences, the NYS COE in Materials Informatics, the NYS Technology & Academic Research Center for Advanced Ceramic Technology at Alfred University, U.B.’s Office of Science, Technology Transfer and Economic Outreach (STOR) and the SUNY at Fredonia Technology Incubator.
Further evidence of the important role higher education plays in economic development can be seen in its active participation in recent state and regional economic development initiatives. All ten of Governor Andrew Cuomo’s New York State Regional Economic Development Councils are co-chaired by presidents of higher education institutions within the region while being populated with education leaders from a range of colleges, universities and community colleges. University at Buffalo Vice President for Research & Economic Development Dr. Alexander Cartwright represents the university on our BNE board of directors.
Here in Buffalo Niagara, the BNE recruits the assistance of individual departments and programs like U.B.’s school of engineering, dental school, department of research and economic development, Erie Community College’s dental laboratory technology program and more to actively engage in and support our research, marketing, business and economic development tactics and initiatives.
Preparing and populating the workforce of tomorrow is an obvious and important role of higher education in economic development. By maximizing their strategic relationships with public and private employers, our education partners develop curriculum and implement job training programs that ensure the more than 22,000 degree and certificate holders they produce annually in our region possess the requisite skills to meet the needs of the region’s employers.
The economic development and revitalization impact, magnified in our region by the academic excellence of our schools in our region, also serves as a vehicle for attracting the best and brightest to Buffalo Niagara. These young people become residents of and ambassadors for our region, improving the quality of life for all by supporting our economy and society in general.
Guest Blog – Mark N. Mercer, CPA, Tax Principal, Lumsden McCormick, LLP
Canadian companies seeking to extend their opportunities into US markets face many legal and tax obligations, yet these requirements are not as daunting as one might initially imagine.
A Canadian corporation engaged in US trade or business is taxable in the US on income effectively connected with that trade or business. A Canadian corporation conducting business in the US may also be subject to taxation in one or more US states. A very minimal level of business activity within a state may create a nexus or presence in that state. Once this presence is established, the company is required to conform to that state’s taxation laws and file returns. States are not obligated to honor the terms of international federal tax treaties, consequently a company may be exempt from US federal income tax pursuant to the provisions of a tax treaty, yet subject to tax in one or more states.
If you will be making sales in New York State that are subject to sales tax (sales of tangible personal property) you must register with the Tax Department and obtain a “Certificate of Authority” within 20 days before beginning business in New York State. If sales are to a destination in New York State then a sales tax would need to be collected and periodically remitted to New York State. Sales tax returns would have to be filed either monthly, quarterly or annually depending on the level of sales activity. Most states have similar sales tax nexus rules and it would need to be determined if the state where the final destination of the sale is requires the business to collect that states sales tax.
If you are a Canadian company, and you have customers in the US, odds are those customers are going to request you fill out a W8-BEN form (Certificate of Foreign Status of Beneficial Owner for US Tax Withholding”), since a 30% withholding tax on income might be applicable to payments that US taxpayers make to a foreign person, which includes foreign corporations. However, there are many exemptions from the withholding requirement. When filing out this form the form asks for your US Employer Identification Number (EIN). Therefore it is recommended you apply for a US EIN by using the Internal Revenue Services’ website. Identification numbers usually can be received immediately online. Once you get your US EIN then you can fill out the W8-BEN for your customer and then get full payment.
Along with the tax rules for Canadian companies doing business in the US, many states have stepped up audits, increased penalties and are actively identifying Canadian non-filers. As well, there are a growing number of information sharing agreements among the states and with US Customs and the Internal Revenue Service.
Canadian companies considering doing business in the US will have many other legal and operational considerations in addition to the above tax rules. These other considerations may include deciding whether to incorporate in the US or operate as a branch, and deciding whether there are specific obligations for US product approval and product liability issues.
Lumsden & McCormick, LLP is a leading local tax and accounting firm. Several of the firm’s members specialize in Canadian cross border tax planning, including transfer pricing, export subsidies, multistate tax planning, and repatriation of profits. For more information please contact: Mark N. Mercer, CPA, Tax Principal, Lumsden McCormick, LLP, (716) 856-3300 or http://www.lumsdencpa.com
