Andrea Smith opened the Square Perk coffee shop on the square in Covington this summer, and she's learning just how expensive opening a new business can be.
The expenses pile up as she pays for salaries, benefits, building renovations and even Christmas decorations. She has to fit in with the rest of the square after all.
Smith is hoping for a bit of reprieve after learning about new job tax credits available in certain sections of Covington at a Monday meeting held in the Turner Lake Community Room.
Business owners in the downtown district and Washington Street commercial corridor can reduce their income taxes and avoid payroll withholding by hiring at least two permanent, full-time workers in a year.
"Any offset to taxes to help with cash flow will be a big help," Smith said after the meeting, noting that her business had extra startup expenses, such as installing new wiring and plumbing, because she moved into an older building. She's hired three or four new employees.
In late June, the downtown business district and Washington Street corridor were named opportunity zones by the state after the city of Covington submitted a proposal showing that the areas were blighted and needed revitalization.
Under the Georgia Job Tax Credit Program, businesses in those areas can receive a $3,500 tax credit per full-time job created. It can be applied to a business's income tax liability and state payroll withholding for up to five years, as long as the jobs continue to exist. The company must create at least two positions and the workers must earn at least $21,580 per year and work 35 hours per week.
Local attorney Frank Turner Jr. said Monday that each job can create up to $17,500 of savings to income tax or payroll withholding during the life of the credit, or $3,500 a year.
The opportunity zone designation is retroactive to Jan. 1, 2010, so a business can be eligible to receive tax credits if it already added two positions this year and maintained them.
Timing can impact the credit.
Dawn Sturbaum of the Georgia Department of Community Affairs said Monday that if a company hires only the minimum two workers toward the end of its fiscal year, it will not receive the tax credit, because its average number of jobs added, on a per-month basis, will be less than two.
Any company preparing to enter its fiscal year needs to hire new employees quickly in order to be eligible for the credit, unless the company is hiring several new workers, which would increase its per-month average.
Monday's meeting will be rebroadcast on the Covington P.E.G. Channel 20. Information, including the opportunity zone map, will be included on cityofcovington.org and on the department of community affair's website, dca.state.ga.us. Sturbaum can be reached for more information at (404) 679-1585 or by e-mail at firstname.lastname@example.org.