Hidden Gems to Help You
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The Hawaii Enterprise Zone Partnership
Island Princess, a local candy company, had been growing since it began in 1983 but struggled to stay alive when the economy nosedived after 9/11. “Sales were way down and we were looking for ways to cut costs and save jobs,” says vice president Gwendolyn Purdy.
The Hawaii Enterprise Zones Partnership was her lifeline and saved the company over $300,000 in seven years. “The funds that remained with our company instead of going out through taxes really assisted us in growing,” she says.
The EZ Partnership is a “hidden gem” government program, one of many that help small businesses raise money, increase revenue, cut costs and improve efficiency. “It all comes down to education,” says Michelle Muraoka, state coordinator for the partnership. People won’t use programs they don’t know exist. But since many of you don’t have the time to uncover these programs, we have done the work for you. Here are five programs that could help grow and improve your small business.
1. Hawaii Enterprise Zone Partnership
The EZ Partnership is a state and county effort that offers tax credits and other incentives to certain types of businesses located in designated enterprise zones. “From the state’s side, this is a job creation program,” Muraoka says.
Each company must have at least one full-time employee, but other hiring requirements depend on whether a firm is existing or new. Existing businesses must increase their staff by 10 percent in year one and maintain that employee level for the second and third years. They then need to increase staff by 15 percent over the next four years. New businesses need to increase their staff by 10 percent in the first year and maintain that employee level for six more years.
Muraoka says planning can make the hiring requirements less challenging. For example, a business that starts the program in a slow year when it has minimal staff, should find it easier to add the required employees if the economy improves.
At least 50 percent of a business’ annual gross receipts must be from qualified industries. About a dozen sectors are eligible, but Muraoka says manufacturing, wholesaling and agriculture are the most common. Each county may nominate up to six enterprise zones, based on the area’s high unemployment or low median income, and they remain zones for up to 20 years. Island Princess was already in Mapunapuna, a designated enterprise zone.
Businesses that fulfill the program’s annual requirements receive a 100 percent exemption from general excise tax (GET), an 80 percent nonrefundable state income tax credit the first year, which declines by 10 percent each of the next six years. There is an additional nonrefundable state income tax credit equal to 80 percent of unemployment insurance premiums paid the first year, which also declines 10 percent for the next six. Licensed contractors are exempt from GET on revenue from construction done at the EZ site of any enrolled business.
“This program doesn’t give you money, but it reduces the amount of tax that you owe and will hopefully make your business more profitable,” Muraoka says. Each county government offers other incentives, such as property-tax adjustments, waiving of zoning or building permit fees, and fast-track permitting. There are about 200 companies enrolled with about 20 more joining each year.
Purdy says the process to apply is comparable to filing your taxes. “The effort is minimal compared to the return,” she says. “During hard times, if it means it’ll keep employees working, it’s worth it to at least find out more about the program.”
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