An enterprise zone tax credit can result in substantial savings – yet too many Long Beach entrepreneurs do not realize these benefits. Your business may be eligible for a California enterprise zone tax credit if it is located in one of the forty-two California enterprise zones designated by Sacramento.
What is a California Enterprise Zone?
Enterprise zones are areas that have been identified as economically disadvantaged. The purpose of a California enterprise zone designation is to provide employment opportunities to these areas, thus improving the local economy. Enterprise zone tax credits have been designed as an incentive for business to locate in these troubled neighborhoods and hire those who might not otherwise have such opportunities. Many states offer similar benefits, and the program is not new; urban enterprise zones are to be found in many cities and rural areas across the U.S.
These enterprise zone credits are of two types: the hiring enterprise zone tax credit and the California enterprise zone tax credit.
How A California Enterprise Zone Tax Credit Increases Your Bottom Line
By locating your company within one of these designated California enterprise zones, it will be eligible for these tax credits. The hiring enterprise zone investment tax credit is available when your company hires a member of an ethnic minority group, a disabled person or a veteran of the Armed Services – and at least 15% of your staff qualify for one of these designations. At $12,500 per eligible employee, the tax savings can add up very quickly; with a maximum benefit of 50% of your company’s workforce and the ability to apply enterprise zone credits retro actively for up to four years, you could realize savings of as much as a quarter-million dollars.
The other half of the equation relates to sales tax you pay when purchasing certain business-related equipment. This part of the enterprise zone investment tax credit is geared toward green technologies that reduce pollution and energy usage; up to ten percent of your after-tax expenditures may be eligible.
Since the rules and regulations surrounding the use of the enterprise zone tax credit can be complex, it is a good idea to have the assistance of a professional CPA in order to make sure that your business gets all the benefits for which it is legally entitled.
