Hiring? Don’t Miss Out on This Incredible Tax Credit
Between recruiting, interviewing and training, bringing on a new employee certainly isn’t free. Wouldn’t it be great to have the government chip in to offset these costs (and more)? The reality is, there’s a good chance the government would be happy to do so.
California wants your business to grow and prosper…so much so that the state is willing to give you fairly substantial tax credits for every person you hire. The only real catch is that you have to go through the application process
Introducing the California Competes Tax Credit (CCTC)
The California Competes Tax Credit is a little-known program that’s been around for a few years. Every business in California is potentially eligible for this program, which provides an average of $10,000 to $30,000 in tax credits for each employee hired. These are actual tax credits—not just tax deductions—that can be carried forward for up to six years.
How much can your business receive? This depends on a few factors, including how many employees you hire. I recently got one of my clients, a hardware store, around $250,000. On average I’ve helped other business owners get anywhere from $10,000 to $150,000.
Got a startup that’s currently in high growth / zero profit mode? This tax credit is for you, too. You can get the credits now while you’re expanding, and then “bank” them to use to slash your taxes later once your business is profitable.
The application process
So what do you have to do to get this money? The application process involves filling out paperwork and creating a proposal and submitting it to GO-Biz (the Governor’s Office of Business and Economic Development). The nice folks at GO-Biz then take a close look at your application, all with an eye towards the anticipated economic impact that your hiring will have.
If your application is accepted, GO-Biz will tell you how much money in tax credits they will give you per new hire.
Of course, you must actually hire the employees
California created this program to incentivize desired behavior. To root out fraud, at the end of the year GO-Biz will do a review to ensure you’re in compliance with your contract. If you don’t follow through with the hiring plans outlined in your proposal, your tax credit is reduced accordingly.