Is There A California Enterprise Zone Tax Credit In Your Company's Future?

With high unemployment rates and the California economy in a downturn, companies are looking for ways to save money.  One of the best, and unfortunately under-utilized, ways that California-based businesses can save money is by using enterprise zone credits.  These enterprise zone credits are available to those businesses that set up shop in an economically disadvantaged area that the state of California has identified as one of forty-two enterprise zones located statewide.

There are several ways that your California business may qualify for an enterprise zone tax credit.  One is through your employees that you hire to work at your company.  The employees that you hire may make your company eligible for up to $12,500 in an enterprise zone tax credit per employee.  Employees that qualify include those that have been out of work, veterans, employees who are economically or physically challenged, as well as Native American Indians, American Samoans and Pacific Islanders that are employed by companies within one of the enterprise zones.  Depending on the industry in which your enterprise zone company operates, fifteen to fifty percent of your workers  will make your company eligible for this enterprise zone tax credit.  An additional benefit that you may receive is that the California enterprise zone tax credit for hiring may go back to four years prior on your amended tax returns.  This can bring small and mid-sized companies in the enterprise zones $200,000 or more.

In addition to this California enterprise zone tax credit, your company may also be eligible for Federal empowerment zone credit per eligible employee.  By hiring employees that typically have a more difficult time finding employment, you are not only qualifying for an enterprise zone investment tax credit for your company, but your are helping to improve your local community and your employee's lives.  State enterprise zone credits are usually also available for employees as well as lenders, improving the locally economy even further.

Your company can also benefit from enterprise zone tax credit for sales tax.  Capital expenditures, which are costly, can gain up to a ten percent reduction in after-tax cost by using this type of enterprise zone tax credit.  The types of company assets that would qualify for this empowerment zone credit can include research and development, processing equipment, manufacturing equipment, air and water pollution control equipment, energy control equipment and more.

You will want to contact your CPA, who can explain each of these types of enterprise zone investment tax credit in greater detail and determine if your company qualifies for them and for what amounts.