Los Angeles County has a variety of incentive programs available to both small and large businesses.  Incentives should not be the only reason why one should consider a location, but could be one of many factors that could help lead to a final location decision. Potential business incentives may be offered at the federal, state and local level.

Incentives typically fall into two categories: legislated and discretionary.  State and federal legislated incentives are "on the books” and available to any business that meets stated criteria.  Discretionary incentives are customized and provided by certain cities and only for specific projects on a case-by- case basis. 

Rarely will either legislated or discretionary incentives turn a poor location into an acceptable one.  Therefore, they should be considered only after a number of locations have been identified that satisfies a company’s key operation requirements.  Incentives should be combined with other factors as part of a strategic comparison of contending site locations.  Financial incentive availability depends on a variety of factors including the state or community’s needs and the project’s economic impact.

One such incentive that is often overlooked is the Enterprise Zone Credit.  Enterprise zones are specific areas in the community where the state & local government partner and offer a variety of incentives to attract private business investment.

There are 12 Enterprise Zone areas in Los Angeles County:

Antelope Valley, Compton, Long Beach, Los Angeles-East, Los Angeles-East Valley, Los Angeles-Hollywood/Mid City, Los Angeles-Central, Los Angeles-South, Pasadena, Santa Clarita, South Gate-Lynwood

The Enterprise Zone Program spurs business development in designated communities through special zone incentives.  Businesses located within the boundaries of an enterprise zone are eligible for tax credits against their California bank and corporation tax liability.   An example of some of the credits include:

1.Sales and Use Tax Credit

The first major enterprise zone tax credit is equivalent to the sales and use tax paid on the first $20 million of new or used manufacturing equipment purchased each year. 

2.Hiring Tax Credit

Secondly, businesses may claim a percentage of the wages paid to a qualified employee as a tax credit. The credit is based on the lesser of the actually hourly wage or 150% of the state established minimum wage.

The credit is provided over a five year period with 50% of the wages creditable in the first year of employment, 40% the second year, 30% the third year, 20% the fourth year, and 10% the fifth year. If the employee were to stay with the company for the entire 5-year period, the company would receive credits totaling nearly $37,400 per qualified employee. If the employee is terminated prior to 270 days of employment the credit is recaptured. 

3.Electrical Rate Discount

Enterprise Zone businesses in the City of Los Angeles also benefit from Department of Water & Power 5-Year Electrical Rate Discount.  Save 35% in the first year as a rate reduction on electrical consumption- for new or expanding businesses.  Over five years Enterprise Zone businesses average a 25% rate reduction.

At B2B CFO® we concern ourselves with the client’s success and aspire for them to attain their goals and dreams.

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