Federal and state employment and job creation incentives are developed to address overarching issues of our country’s economic development. Employment tax credit programs are each unique regarding its specific goals and objectives but increasing business growth is a common focus e.g. (job creation and capital investment) and/or emphasis on employing individuals with certain barriers to employment.
The following are seven essential benefits of claiming employment incentives:
To Reduce Your Company’s Direct Cost Of Employment
Wage subsidy programs provide temporary funds to employers who offer experience and skills enhancement to eligible disadvantaged workers. The duration and wage subsidy amount is directly related to the amount of training required for each eligible employee to be successful in a position.
To Reduce Your Employment Recruitment Costs
Hiring and maintaining high-performing workers can be a drain on your company’s financial resources. With employment incentives, like the Department of Commerce Recruitment, Relocation and Retention Incentives Plan, you may recover some of the costs associated with finding and keeping your best employees.
To Reduce Your Federal And State Income Tax Dollar-For-Dollar
The Work Opportunity Tax Credit (WOTC) is an incentive for employers who hire a targeted group of individuals, such as veterans or ex-felons, facing significant barriers for employment. This employment incentive offers a dollar-for-dollar tax credit against your company’s income tax liability. The participation in the WOTC program may help your business fund other projects, or even assist in the expansion of your business or its service offerings.
To Reduce Training Costs For New Hires
Certain state employment incentives programs exist to promote on-the-job training (OJT) in the form of grants and reimbursements. OJT grants are available to private companies and nonprofit organizations. These hiring incentives enable your company to hire new employees and train them while being reimbursed a percentage of employee wages during training.
To Increase Financial Assistance Related To Job Creation
On the state level, you may benefit from job creation incentives, in which your company receives capital for expansion projects. This employment incentive is especially helpful if your company has limited access to capital and funding from conventional, private sources.
To Reduce Your Company’s Payroll Costs
All employers have federal payroll tax responsibilities for their employees. Tax incentives will provide for a reduction of the company’s overall employment cost through income tax credits or direct reductions to their payroll tax liability. Many programs calculate a benefit on a per qualified employee basis with the dollar amount of this employment incentive depends on the duration of employment and eligible wages paid.
To Reduce Your Company’s Effective Tax Rate
Your company’s overall effective tax rate is the net rate you pay if all forms of taxes are included and divided by taxable income. One way to reduce your effective tax rate is by claiming tax credits and incentives offered by certain jurisdictions looking to encourage local business growth.
Employment incentives are created to generate economic activity, while also helping businesses thrive. With a variety of employment incentives created on both the federal and state level, it’s important to team up with an outsourced tax consultant who knows how to find every available tax credit and incentive for which your company may qualify.
Interested in learning more about one of the most popular employment incentive programs, the WOTC? Download your complimentary guide below.
