Savings Requires Diligence and Detective Work
by Keith I. Dougan
For many businesses and organizations telecommunications and other utilities represents a substantial operating cost that has a direct impact on the bottom line.
Despite this impact, most organizations do not have time or the expertise to identify and solve problems affecting billings. There are many ways to reduce your monthly utility costs ranging from tax exemptions to service consolidation to having utility companies bid on your utility service.
Most states provide some type of tax incentive for businesses, whether in the form of credits or exemptions for utilities sales tax, the construction of a new building, the improvement of an existing building or the hiring of new employees.
Missouri Senate Bill 30, passed during the 2007 legislative session, will provide manufacturers with tools they need to compete with manufacturers in other states and countries in the global economy. Manufacturers will now be able to take much broader exemptions for energy use, as well as new exemptions for research and development costs. These include energy sources, water, chemicals, machinery, equipment, and materials when they are used in manufacturing, processing, compounding, mining.
Kansas law provides for a variety of tax incentives to the average business or individual that includes tax credits, exemption from sales tax and property tax abatements and refunds.
The Kansas Department of Revenue has an outreach program that provides information about these incentives.
The purchase of machinery and equipment (including repair and replacement parts and accessories) that is used in Kansas as an integral or essential part of an integrated production operation by a manufacturing or processing plant or facility is exempt from sales tax. The installation, repair and maintenance services performed on this equipment are also exempt from sales tax. Most utilities used in the production of an end product are exempt as well.
The new Missouri law benefits manufacturing or processing businesses. The law defines “manufacturing or processing business” as a business that utilizes an integrated production operation to manufacture, process, fabricate, finish, or assemble items for wholesale and retail distribution as part of what is commonly regarded as a industrial manufacturing or processing operation or an agricultural commodity processing operation. The exemption does not apply to retail operations or other non-industrial businesses. Retail operations and non-industrial businesses include, but are not limited to: contractors; construction companies; retail businesses that prepare food products for consumption by the buyer on or off premises; businesses that service or refurbish property that is returned to its owner, such as repair shops and machine shops; copying services, photo finishing services, and similar businesses that perform services for retail customers; telephone companies; and utility transmission and distribution operations.
When it comes to telecommunications, this can cover everything from your telephone and voicemail system, internet service, cabling infrastructure, cellular service to the dial tone provided by your local carrier. Knowledge is your best ally when it comes to savings in telecom and utilities costs. Knowing the industry and the many promotional packages being offered can save your business thousands of dollars. Every month it seems that a carrier is offering a new promo, keeping up with these changes is a task in itself. Most entrepreneurs and proprietors have neither the time nor the expertise to identify and monitor these changes. Combining many of these services and shopping the different providers will often show large price differences. Also, when your utility usage reaches a certain point your business is better off buying the utilities in bulk. Again, you can shop the different utility providers to get the best price.
These and several other ways can help to reduce the monthly costs for your business. While many of these saving methods can be fairly simple, they do require a great deal of diligence. So do your homework and read the fine print.
Keith I. Dougan is a Project Manager at Show-Me Publishing, Inc.
P | 816.268.6404
E | KDougan@IngramsOnLine.com