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  • Special Incentives and Programs for New Businesses
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    Enterprise Zones

    Enterprise zones in the U.S. are in a state of flux. Federal enterprise zones were launched in the mid-1990s across the U.S. The impetus behind these zones was to renew neighborhoods and boost economic activity—including that of the small businesses located there—and in the process, spur job creation. Among the incentives for employers in these zones were tax credits for employees and deductions on business property.

    A range of studies have shown that these zones’ incentives have made a difference in communities, but with results varying widely. These programs’ federal tax benefits were phased out in late 2013.

    Some states, however, continue to support various versions of enterprise zones in partnership with local communities. For example, although California’s state enterprise zone programs were abolished at the end of 2013, the state of New York launched a program of its own at about the same time. Among other states that offer ongoing enterprise zone programs are Illinois, Iowa, Louisiana, and Texas.

    With all of these programs, job creation is big priority. If you’re looking to launch a small business with just one or two employees to keep your overhead down, your business probably will not be eligible for this kind of incentive program. But if you’re planning on having a larger payroll, it can’t hurt to do the research; every state-sponsored enterprise zone has different requirements.

    The benefits to your business can include tax credits for job creation, and sales and investment tax rebates. In fact, the state of New York has sweetened the pot with zero taxes for qualifying employers in its enterprise zone communities, including no income tax, state or local taxes, sales tax, property tax, or franchise fees—for 10 years.

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    To find out whether your local community, or a community where you’re considering locating your business, is in an enterprise zone, start with your state. Your best bet is to perform a web search of your state and “enterprise zone.” You might also want to contact your city’s or local community’s economic development office to learn about possible enterprise zone opportunities.

    One federal program still in play for economically disadvantaged communities is the HUBzone program. This program provides small business owners located in these designated areas with enhanced access to federal contracting opportunities. To learn more about the HUBzone program, start in this section of the Playbook.