Guide to Starting and Running

Potential Tax Breaks.
Because they play such an important 
role in the economy (and in job creation), manufacturers 
hold a place near and dear to the hearts of elected officials 
and governments . As a result, you will want to do a check 
on the economic development and tax laws in your locale 
to see if there are ways you can benefit as you start your 
new enterprise . 
Oftentimes, state and local governments provide tax breaks 
for new manufacturers, such as property tax and sales tax 
breaks in enterprise zones and tax increment financing (TIF) 
districts . Most states offer a sales tax exemption for the 
purchase of manufacturing machinery and equipment .
Also, both state and federal tax laws will typically provide 
tax credits for research and development costs as you 
innovate and come up with new products . You can find 
special accelerated depreciation and expensing rules for 
manufacturing machinery and equipment in the federal tax 
code . And most, but not all, states allow these accelerated 
expensing methods to apply in calculating state income tax 
liability, as well .
If you are choosing between potential locations in different 
states to start your business, you will want to check the web 
sites of the economic development department and the 
revenue department in each state . These resources usually 
provide a wealth of useful information about the tax impli-
cations of starting a business in the state .
You should also check the web sites of the states’ manu-
facturers’ association, which will likely serve as excellent 
resources on both tax matters and economic development 
financing opportunities within their states . 

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– 11 –
Limiting your liability and protecting your 
assets for your manufacturing business
A manufacturer, almost more than any other type of 
business, must take liability issues into account in consider-
ing the type of business entity to establish and the type of 
insurance coverage to maintain . Manufacturers just have a 
lot more to worry about, including the potential dangers in 
a manufacturing workplace and the harm that may occur to 
consumers using the manufactured products . 
First, when setting up any business, you will generally want 
to protect your personal assets from potential liability 
resulting from the obligations of the business . Because of 
the higher risks of liability in manufacturing, protecting your 
personal assets is all the more important . Typically, a corpo-
ration or a limited liability company entity type is chosen 
for doing business . These forms of organization provide 
the most complete protection from personal liability for the 
obligations of the business .
To protect the assets of the business, you will want to have 
insurance that will protect the company from potentially 
devastating tort claims . In product liability cases, a company 
can be held strictly liable for the safety of its products .
Defects in either the design or the manufacture of the 
product can result in substantial claims if people are harmed 
as a result of using your products . Even an insufficient 
warning about the potential dangers of a product can result 
in strict liability for any harm that results from its use . Thus, 
getting adequate product liability insurance is essential as 
you start up your business, in addition to all the usual types 
of insurance purchased by small business owners .
Finding other manufacturing
information resources
When you are just entering into a new business venture, 
especially one that can be as complex as manufacturing, 
you want to gather as much information as you can to 
identify the steps for getting started . Resources are readily 
available through industry organizations, and you’ll find 
many members of the industry eager to assist you as you 
enter the field .
Perhaps your best first stop would be your state manufac-
turers’ association . For networking with other manufac-
turers and for more focused assistance on issues in your 
geographic area, the state or local associations may be 
able to provide more of the help you need . Next, you can 
find helpful information on a national level through the 
National Association of Manufacturers, 
www .nam .org
. You 
may also find some useful information and contacts at the 
Association for Manufacturing Excellence, 
www .ame .org
.
Another important contact to make as you are starting your 
new business is with your state’s or city’s economic develop-
ment department . Most of these departments have units 
specifically assisting small businesses as they startup opera-
tions . They can provide information regarding incentive 
programs, loan and grant programs, and tax benefits that 
may be available as you begin your new business . Often, 
they can provide incentives for locating a business within 
their city or state . They can identify enterprise zones or TIF 
districts where there are favorable tax consequences for 
setting up a business .
Manufacturing and Services (MAS) is a unit of the 
International Trade Administration within the U .S . 
Commerce Department . It is dedicated to enhancing the 
global competitiveness of U .S . industry, expanding its 
market access, and increasing exports . On its website at 
www .manufacturing .gov
you can find links to assistance for 
manufacturers offered by the federal government, state 
and local governments, and industry associations .

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– 12 –
Once your manufacturing enterprise is up and running, 
don’t begin to think that your work is over . It’s really just 
begun . And if you want to maintain and grow your business, 
you will need to stay focused on continuing improvements 
to your products and your process .