Businesses in the zone – from large manufacturing companies to small neighborhood restaurants – can significantly reduce their state income taxes by taking advantage of special California Enterprise Zone tax benefits.

Located within the Fresno Enterprise Zone borders are affordable manufacturing and commercial sites, as well as unique retail locations.  The zone is within immediate access of two freeways, two state highways, the Fresno Yosemite International Airport and the Downtown Chandler Airport.  It is also in close proximity to a wide range of educational facilities, housing and other amenities.  These assets add up to an increasingly powerful ability to assist current businesses and attract new companies, jobs and investments.

A business located within the Enterprise Zone can receive tax credits each time it hires an eligible employee or purchases qualified new machinery, equipment or pollution control devices.  Incentives are also available to many employees who work in the zone and lenders who make loans to qualified businesses.  Most businesses in the Enterprise Zone are automatically eligible for benefits.  There is no certification process.

If you are in the Fresno Enterprise Zone, or you want to know if you are, contact us directly by clicking here.  C & I Tax Consultants are here to help you receive the full tax credit that you are entitled to.

Industries locating or expanding in Kings County can access numerous pro-business incentives such as:

• Hiring Tax Credits – Firms can earn $31,574 or more in State tax credits for each qualified employee hired.
• Sales and Use Tax Credit – Zone companies may receive a sales tax and use tax credit for manufacturing or processing machinery, data processing and communications equipment and motion picture manufacturing equipment central to production and post production, to be used in the Zone. Individuals can claim a credit on the first $1,000,000 of qualifying purchases, while corporations can claim credit on the first $20,000,000 per year.
• Business Expense Deduction – Up front expensing of certain depreciable property.
• Net Operating Loss Carryover – Up to 100% of the NOL may be carried forward for 15 years.
• Net Interest Deduction – Lenders to Zone business may receive a new interest deduction.
• Unused tax credits – Can be applied to future tax years.
• Preference Points – Enterprise Zone companies can earn preference points on state contracts.

Who is in the Barstow Enterprise Zone?
All types of existing businesses:

• Railroads
• Truck Stops
• Dentists and Doctors
• Auto Mechanics
• Car Dealerships
• Beauty Salons
• Coffee Shops
• Accountants
• Printers, Hotels, and More

Any businesses that is located within the boundaries of the Enterprise Zone is eligible for the numerous benefits of the Enterprise Zone location.

How do I get into the Barstow Enterprise Zone?
By relocating  in the Enterprise Zone!  Buy, lease or build within the boundaries of the Enterprise Zone and your business will receive all the benefits of being in the zone.

What are the benefits of being in the Barstow Enterprise Zone?
For starters, how about a Hiring Tax Credit of more than $30,000 per qualified employee during a 5-year period?

Your business may be eligible for:

• Sales and Use Tax Credits
• Business Expense Deduction for Business Property
• Net Operating Loss Carryover
• Net Interest Deduction for Lenders
• Employee Wage Credit

Both existing businesses, as well as new businesses that move into the Enterprise Zone, may receive the above benefits.

Other Barstow Enterprise Zone Incentives

• Favorable loan programs
• Industrial sites as low interest or interest-free financing
• Building ready to occupy
• Pads ready for building
• Fast-track planning and building permits
• 34-acre business park with utilities already in
• Barstow is a pro-business city
• One-Stop career center for workers and employers
• State sales and use tax credits on qualified purchases

Some equipment within certain warehouse/distribution centers may qualify for the sales tax credit. The specific details of the client’s operation will need to be reviewed with the Franchise Tax Board and they will need to make a determination on eligibility.

Other Benefits
15-year carryover of up to 100 percent of the net operating losses;
Expensing up to $15,000 of certain depreciable property;
Lender interest income deductions for loans made to zone businesses;
Preference points on state contracts.

Enterprise Zone Tax Credits
As a state designated enterprise zone, new and existing businesses may qualify for State tax credits, including:

Sales Tax Credit – California income or franchise tax may be reduced by the amount of sales and use tax paid on certain machinery purchased for use in the enterprise zone. The equipment must be used to manufacture, process combine or fabricate a product. The sales and use tax credit may be carried over to offset tax imposed in subsequent years.

Hiring Credit – A business may reduce taxes paid by up to 50% of the amount of wages paid to one or more qualified employees. These state credits are in addition to any federal tax credits. A qualified employee is a new hire that are participants in a qualified job development or training program. Business may earn credits of up to $24,000 per employee over a five year period.

Business Expense Deduction – Part of the cost of certain property purchased for exclusive use in an enterprise zone may be deducted as a business expense in the first year it is placed into service. The type of property qualifying for the credit is tangible personal property (not real estate) which is used for business purposes and is eligible for depreciation.

Net Operating Loss Carryover – Net operating losses (NOL) of individuals and corporations doing business in the enterprise zone may be carried over to future years to reduce the amount of taxable income generated in the enterprise zone and is determined by computing the business loss which results from business activity in the enterprise zone.

Manufacturers’ Investment Credit – The Manufacturer’s Investment Credit provides manufacturers a State Income Tax Credit of 6% of the purchase price of qualified property. The Credit may be carried over for up to 7 years from the date of purchase.

San Diego’s economy is largely composed of agriculture, biotechnology/biosciences, computer sciences, electronics manufacturing, defense-related manufacturing, financial and business services, ship-repair and construction, software development, telecommunications, and tourism. The presence of the University of California, San Diego (UCSD) with the affiliated UCSD Medical Center promotes research in biotechnology.

If you have a business in the San Diego area, contact us for a free consultation on how you can take advantage of the California State Enterprise Zones.

This beautiful city is also home to a California State Enterprise Zone, so if you have a business operating in this area, contact us to see if you qualify for corporate tax credits.

What are the incentives?
The following incentives are available through the State of California, from which the following summary was obtained:

Hiring Tax Credits
EZ businesses can earn up to $31,574 in State tax credits for each qualified or voucher employee hired over a five-year period.  Refer to The Alliance for information about eligibility criteria to determine whether an employee qualifies for this credit.

Sales & Use Tax Credits
EZ businesses may receive the sales or use tax credit for the purchase of manufacturing or processing machinery, data processing and other equipment used in the EZ.  Individuals, partnerships, subchapter S corporations, and limited liability companies can claim a credit on the first $1,000,000 of qualifying purchases per year, while corporations can claim credit on the first $20,000,000 of purchases per year.

Business Expense Deduction
Up front expensing of certain depreciable property can be claimed.

Preference Points
EZ businesses can earn preference points on state contracts.

Operating Loss Carryover
Up to 100% of the Net Operating Loss may be carried forward for up to 15 years.

Net Interest Deduction
Lenders to EZ businesses may receive a net interest deduction.

Unused Tax Credits
Unused tax credits can be applied to reduce future tax liability.

A business located in the Watsonville Enterprise Zone (see map) can take advantage of tremendous tax credits offered by the State of California. Below are some of the tax credits, for more information go to Economic Development Areas (EDA).

Hiring Tax Credit

Businesses may reduce state taxes by up to $37,440 per qualified employee over a five-year period. Qualified employees are new employees who are hired to work at least 50% of their time within the Enterprise Zone and meet ONE of the following criteria:

• Resident of the Targeted Employment Area (see TEA map) or
• Participant or eligible for services from the Santa Cruz County Career Works program (Calworks/WIA) or
• Dislocated and/or unemployed or
• Seasonal worker or
• Public assistance recipient or
• Work Opportunity Tax Credit eligible or
• Veteran or
• Native American

The Redevelopment and Housing Department determines eligible employees and issues the vouchers allowing businesses to take advantage of the tax credit. The City of Watsonville offers workshops for businesses currently participating in the EZ program and also for those businesses wanting more information on how to participate. Please contact Jacqueline Ventura to obtain applications for vouchers or to attend the next informational workshop at: 831-768-3095 or jventura@ci.watsonville.ca.us

Sales and Use Tax Credit

Businesses can substantially reduce their California income or franchise tax obligations by taking advantages of this tax credit. In any year, companies may claim a tax credit equal to the tax paid on certain machinery purchases to be used exclusively within the boundaries of the Watsonville Enterprise Zone. Individuals and partnerships may make this claim on the first $1 million of machinery purchased; corporations may claim the credit on the first $20 million of machinery purchased in any one year. For more information, contact the California Franchise Tax Board at (916) 845-3464 or http://www.ftb.ca.gov.

Business Expense Deduction

Businesses may deduct part of the cost of tangible property as a business expense in the first year it is placed in service. This includes most equipment and furnishings purchased for exclusive use in the Zone (excluding real estate). Depending on the date the property was placed in service, relative to the Enterprise Zone Final Designation, the amount deducted per property can be as much as $20,000. For more information, contact the California Franchise Tax Board at (916) 845-3464 or http://www.ftb.ca.gov.

Net Operating Loss Carryover and Net Interest Deduction for Lenders

Individuals or corporations in an Enterprise Zone may carry over up to 100% (versus 50%) of net operating losses (NOL) to future years to reduce the amount of taxable income for those years. The NOL carryover is determined by computing the business loss, which results strictly from business activity in the Enterprise Zone. (Suspended for 2002, 2003) Individuals, non-commercial lenders and commercial institutions may deduct the net interest earned on a loan to a business operating solely within the Watsonville Enterprise Zone. The net effect could be a 3 to 4% increase on return-on-investment! Net interest deductions are for the life of the Enterprise Zone.

In 1985, California legislation was passed enabling the designation of  “Enterprise Zones” throughout the state. The purpose of the Enterprise Zone program is to provide tax incentives to businesses, thereby encouraging and bolstering private sector market forces in target areas.

Enterprise Zone companies earn tax credits by hiring participants in the Workforce Investment Act (WIA), Cal Works and the One Stop Services Department.

Business Investment Incentives /Tax credits and benefits to qualified companies are:

• Up to 100% Net Operating Loss carry-forward. NOL may be carried forward 15 years.
• Firms can earn $37,440 or more in state tax credits for each qualified employee.
• Corporations can earn sales tax credits on purchases of $20 million per year of qualified machinery and machinery parts.
• Up-front expensing of certain depreciable property.
• Lenders to zone businesses may receive a net interest deduction.
• Unused tax credits can be applied to future tax years, stretching out the benefit of the initial investment.
• Enterprise Zone companies can earn preference points on state contracts.

Other State investments include State contract bid preference points; low-interest small business loans; and lender’s deduction of interest income earned on loans to businesses in the Zone. Also qualifying new employees can claim tax credit on their State Income Tax.

Calexico Administrative Incentives

The City of Calexico offers these administrative incentives to new and expanding businesses:

• Fast-tracked building permits
• Waiver of building permit, plumbing and electrical fees
• Rebate of business license and refuse collection fees for a two year period.

How much can My Business Save?

The answer depends totally on the tax position of your business and the nature of your business investments. A large manufacturer with significant equipment investments and equipment investments and many new employees save literally hundreds of thousands of dollars, while another business might make investments which do not meet the qualifying criteria. It is best, therefore, to be aware of the tax benefits and make investment decisions accordingly. It should be noted that many of the investment incentives consist of State tax credits, which can be claimed against a tax liability, and therefore, are more valuable than tax deductions.

California Income Tax Effect of The Employer’s Tax Wage Credit

Summary

An employer may claim a credit against its income tax liability for a percentage of wages paid to qualified employees.

Amount of Credit

50% of qualified wages in Year 1
40% of qualified wages in Year 2
30% of qualified wages in Year 3
20% of qualified wages in Year 4
10% of qualified wages in Year 5

If you are looking to move your business into Pasadena there are a wide range of tax credits available to you, such as:

Hiring Credit Program
This five year state tax credit, potentially up to $37,000 per qualified employee, for full-time or part-time employees that meet one of the twelve qualifying criteria under the Hiring Credit Program. Potential criteria includes but not limited to: previously laid off due to plant closure or downsizing, military veteran, public assistance recipient, and resident of a targeted employment area. Enterprise Zone business must obtain a Hiring Credit Voucher from the Pasadena Enterprise Zone Office.

• Targeted Employment Area Ranges for 2007 Designation
• 2007 Targeted Employment Area Map
• State Income Limits 2008 to 2000

Sales and Use Tax Credit
Allows Enterprise Zone businesses to claim a state tax credit equal to the sales and use tax paid on the purchase of qualified equipment. Qualified equipment includes assets such as manufacturing, data processing, office, audio/video, and computer equipment.

Business Expense Deduction
Enterprise Zone businesses may deduct up to 40% of the cost of qualified property purchased for exclusive use in an Enterprise Zone during the first year it’s placed in service.

Net Operating Loss
Enterprise Zone businesses may elect to carry forward 100% of their net operating loss for 15 years.

Net Interest Deduction for Lenders
Lenders can earn a deduction from income on the amount of net interest earned on loans made to Enterprise Zone businesses. Businesses looking for an edge in applying for a loan should bring this credit up with your lender.