Andrea Smith opened the Square Perk coffee shop on the square 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. However, 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 Covington's 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 any given year.
"Any offset to taxes to help with cash flow will be a big help," Smith said Monday, after the meeting, noting that her business had extra start up expenses, such as installing new wiring and plumbing, because she moved into an older building. She's hired three or four new employees, who would constitute full-time positions.
In late June, the downtown business district and Washington Street corridor were named opportunity zones by the state, because 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 now receive a $3,500 tax credit per full-time job created, which 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, which can experience turnover but must not be eliminated. The employees must also make 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 a total of $17,500 of savings to income tax or payroll withholding during the life of the credit, or $3,500 multiplied by 5 years.
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.
However, Dawn Sturbaum, with 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.
So any companies who are preparing to enter their fiscal year need to hire any new employees quickly in order to be eligible for the credit, unless the company is hiring several new workers, because then the average per-month increase will still be greater than two, even if the employees are hired later in the fiscal year.
If owners were unable to attend Monday's meeting, it 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 at dca.state.ga.us. Sturbaum can be reached for more information at 404-679-1585 or by e-mail at email@example.com.
Members from the local chamber of commerce and Main Street Covington were in attendance to learn about the program and spread the word to their members.