Ace Hardware
Enterpise Zone Tax Credits
In 1996, two second-generation Long Beach locals and brothers, Tyler and Trent Barnes, decided to expand upon their existing business on the east side of Long Beach by opening a second store in Downtown. Coupling their personal investment with a loan from the City of Long Beach, the brothers Barnes purchased and improved a building at Fourth Street and Olive Avenue and opened their second Ace Hardware franchise.
Reflects Trent, "We felt like the Downtown would become a strong market over time; it's amazing to see how much the neighborhood has changed. The risk we took has really turned out well." After running their business for several years, the brothers learned about a financial incentive available from the State of California called Enterprise Zone Tax credits. The program provides businesses within certain areas (all of Downtown Long Beach is eligible) with more than $31,000 in state tax credits per employee over a five-year period. Eligible employees are those that meet any one of 13 state-mandated criteria.
Since half of their employees qualified under the state criteria, the program would provide a substantial tax break for Tyler and Trent's Downtown business. Additionally, the program even allowed the brothers to file retroactively and recapture the tax savings they would have received in previous years. Trent continued, "We like to pass our tax credits along to our employees and pay them more than we normally could - as a result, the business has not experienced any staff turnover for over 18 months. The program has created a virtuous cycle where our bottom line has improved, enabling us to reward our employees, which in turn makes them work harder for the business."
When asked whether other businesses in Downtown should look into the program, Trent answered assuredly, "Absolutely. It would be a mistake for other businesses to not look into the program. After working with an accountant to set everything up, we even handle all of the paperwork ourselves now."
For more information about the Enterprise Zone Tax Credit Program, click here.