That time of year is upon us again. As 2009 taxes are prepared, it is a yearly ritual to see if there is anything you can do differently to optimize your returns for the next year. If you, like many, haven’t heard of California Enterprise Zones, I have great news for you!
What Is A California Enterprise Zone?
California’s Enterprise Zone program was established in 1984 to stimulate business investment and help create jobs through special tax incentives to businesses located within designated areas of the state. Currently there are 42 Enterprise Zones throughout the state, and there may be one near you. (When we first learned of Enterprise Zones, we discovered that several of our locations are in designated Enterprise Zones!)
What Are The Benefits Of Being Located In An Enterprise Zone?
According to the California Enterprise Zone Website (http://www.caez.org/) there are quite a few benefits to locating your business in an Enterprise Zone:
- HIRING TAX CREDIT – State tax credit of $36,000 or more over five years for each qualified employee hired.
- SALES OR USE TAX CREDIT – State tax credit for sales and use taxes paid, up to $20 million per year, on qualified machinery and machinery parts purchases.
- INCREASED EXPENSE DEDUCTION – Accelerated expense deductions for certain depreciable property.
- NET OPERATING LOSS CARRYFORWARD – Up to 100 percent net operating loss deduction and a 15-year carry forward.
- NET INTEREST DEDUCTION FOR LENDERS – Net Interest Deductions for lenders on loans made to firms within an Enterprise Zone.
- STATE PREFERENCE POINTS – Enterprise Zone companies can earn preference points on state contracts.
How Do You Qualify?
California Enterprise Zone tax credits do have a few rules associated with them, the major rule being that your business must be located in a California Enterprise Zone. The first step suggested by the California Association of Enterprise Zones is to contact a designated Enterprise Zone Manager. You can find the list of managers by visiting: http://www.caez.org/About-Enterprise-Zones/Zone-Managers-Directory/index.html.
There has been some debate about the effectiveness of California Enterprise Zones. According to the California Association of Enterprise Zones, the program has come under the close scrutiny of state lawmakers. So, speak with your tax professional or get in touch with an Enterprise Zone Manager before you end up leaving your money on the table – permanently.
Currently serves as a Marketing Manager with a focus in online marketing and market strategy. Prior to joining Pacific Business Centers (rebranded as Pacific Workplaces), Nick consulted with small businesses to assist in a business development and public relations role.