What it is and why you should act fast
The high cost of doing business in California can be challenging. Lucky for California businesses, a tax incentive is available to businesses looking to come, stay or grow their operations within the state. For small and medium-sized businesses with recent headcount increases or property investments, or those who have planned investments over the next five years, the California Competes Tax Credit will be particularly enticing.
The California Competes Tax Credit (CCTC) is open to businesses of all sizes and industries and aims to offset state income tax. Applicants of the grant may request up to 20% of the $230 million the CCTC Committee has to award to California businesses. 25% of that $230 million is reserved for small businesses.
The first application period will start on July 30, 2018, with $70 million in tax credits available. Starting July 30, the online application can be accessed at www.calcompetes.ca.gov. Two additional periods are scheduled in 2019, however the amounts have yet to be announced.
July 30, 2018 – August 20, 2018: $70 million available
January 2, 2019 – January 21, 2019: Amount available TBD
March 4, 2019 – March 25, 2019: Amount available TBD
The amount of the credit is negotiated by the Governor’s Office of Business and Economic Development (GO-Biz) and is ultimately approved by a committee consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, and one appointee each by the Speaker of the Assembly and Senate Committee on Rules.
The application process includes an in-depth analysis of your business operations, therefore it’s important to begin examining the information as early as possible. Expect the application process to take 3-6 weeks as it will require business owners’ input (and likely consulting from outsourced providers).
The credit awards are based on 11 factors, including:
- Number of jobs created or retained
- Compensation paid to employees
- Amount of investment
- Duration of proposed project and commitment to remain in this state
- Extent of unemployment or poverty in business area
- Extent the benefit to the state exceeds the amount of the tax credit
- Incentives available in other states
- Opportunity for future growth and expansion
- Other incentives available in California
- Overall economic impact
- Strategic importance to the state, region, or locality
Once a business applies for the credit, GO-Biz will calculate and compare the cost-benefit ratio of each applicant, followed by a more in-depth analysis of the top applicants. From there, selected applicants will begin negotiating terms and conditions with GO-Biz — which ultimately awards and allocates the credit to the businesses.
How SSF can help
If you are interested in applying for CCTC, SSF can help guide you through the entire process. From pre-application planning and analysis through application submission, our team can help you make the most of this significant opportunity.
Want to learn more about the California Competes Tax Credit? Contact us at 925.271.8700 or at firstname.lastname@example.org.