Tax Policies For California Competes requirements need to be understood by every small business if
receiving the California Competes credits.
The Franchise Tax Board of
California has just reviewed all businesses in the state and provided a very
clear set of guidelines that businesses receiving the credits need to follow when doing their income tax filing.
California introduced the California Competes tax initiative this year. The new initiative is intended to help grow struggling small businesses in the state. According to Governor Brown’s office, the state has allocated $151.1 million for eligible businesses.
While the benefits of the California Competes credits are indisputable, many entrepreneurs have raised questions about receiving them.
In January, the Sacramento Business Journal reported that the Brown Administration had approved California Competes applications for 51 businesses throughout the state.
However, many potentially eligible businesses are reluctant to file an application, because they don’t understand the legal form requirements.
The Franchise Tax Board is trying to educate people about the new initiative and the eligibility criteria for applying. They have also spent several months reviewing participating businesses to ensure they are in compliance.
The Governor’s Office of Business and Economic Development is releasing some of the details about the new policy after finalizing their reviews. Here are some of the questions that they have answered.
Who is eligible for the California Competes tax credits?
The tax credits are available to businesses that plan to stimulate the state economy and benefit local businesses. There are eleven criteria that the governor’s office takes into consideration while reviewing applications:
Since there are so many factors involved, businesses should consult with a tax expert before applying. They can help create a strategic plan to ensure they receive the highest possible credit.
How much can a business receive in tax credits?
The state has earmarked slightly over $150 million for businesses in the 2014/2015 fiscal year. The credits available to different California business structures will increase to $200 million the following year.
The state law allows a single business to receive up to 25% of the available tax credits (i.e. nearly $40 million in 2014/2015).
However, while extensive tax credits are available, businesses will need to demonstrate the cost-benefit impact on the state. Here is the formula that the Brown Administration uses:
Total credit sought / ( (Number of jobs created * average salary per job) + Total capital investment)
Companies that prove that they are providing the highest return for the state are given preference.
You may want to consider requesting a smaller amount of money to fund a more obviously beneficial project if you hope to receive funding.
There are a number of factors that businesses need to be aware of while applying for a California Competes tax credit.
You will need to make a good case if you hope to receive the funding that you are looking for.
If you need help applying for Tax Policies For California Competes tax credits, then you should contact Horne Financial. We offer a number of tax services and look forward to assisting you!
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