We all know that now, more than ever, running a business is very expensive. The price of labor and all of its associated and inflating costs (insurance, payroll taxes, bonuses, etc.), pricey insurance, rising rents and a slew of other financial burdens present constant challenges to your bottom line. Once you finally get to the bottom line, you are now subject to sizable income taxes. These taxes also which show no sign of reductions in California.
There may seem like there not a lot of opportunities out there to combat this reality. One potential life saver here in San Francisco, though, is the California Enterprise Zone Program. You can be eligible for large state income tax credits based on qualified jobs created and capital investments in equipment (including software) if your company operates within the boundaries of one or more of the state’s 42 targeted zones, including the San Francisco Enterprise Zone. These companies SHOULD hire in San Francisco.
The best part is there is a four-year statute of limitations. As a result, companies can identify credits they may have otherwise missed. They can then claim them against taxes paid, dollar for dollar, generating refunds. If your company is set up as a pass-through entity (LLP, LP, Partnership or S-Corporation), any earned income tax credits will flow through directly to the shareholder(s) and be applicable against personal income tax liabilities. Firms operating as C-Corporations (general) can offset CA corporate income tax with earned credits.
Although Enterprise Zones are business communities targeted for revitalization, this program is not only intended to benefit manufacturing or heavy labor industries. Professional service companies and Tech Companies, stand to benefit greatly from the program as well. Companies creating jobs in the Enterprise Zone should be securing these benefits each year. If new hires meet 1 of 15 qualifying criteria when hired, ranging from former military, hired off unemployment or straight out of school, they can generate income tax credits for the company amounting to $37,000 over five years. California sales tax on qualified asset purchases is recoverable as well.
Nearly all of downtown San Francisco is in the Enterprise Zone. Therefore, if you are operating in Fisherman’s Wharf, Downtown and the Financial District, the Embarcadero, the Mission District or the Central Waterfront, you could be eligible to participate in this great program.