Hiring more employees is a requirement for almost every growing business, but the decision about when to do so is often a complicated one, especially for finance leaders. For each new hire, it must be determined that they're worth the investment that they command, including salary, the cost of recruitment, hiring and onboarding.
To maximize the ROI of each new employee, you should help ensure your HR and finance teams are educated about the plethora of federal and state tax credits and incentives available for qualified employers, from the federal Work Opportunity Tax Credit (WOTC) program to your state and local tax credits for jurisdictions that want to invest in growing their economies.
Here are just a few of the federal and state tax credits you should to know about as a finance leader.
Work Opportunity Tax Credit
Individuals who may be eligible for the Work Opportunity Tax Credit (WOTC) include:
- Certain veterans
- Qualified food stamp (SNAP) recipients
- Designated community residents
- Qualified ex-felons
- Supplemental security income (SSI) recipients
- Short-term family assistance (TANF) recipients
- Long-term family assistance (TANF) recipients
- Summer youth employees (in empowerment zones)
- Qualified long-term unemployment recipients
- Vocational rehabilitation referrals
Organizations that hire and retain these individiuals may be eligible for a tax credit between $1,200 and $9,600 per eligible employee, according to the DOL. A wide variety of people and skill sets are present in every category. If you're not taking advantage of the Work Opportunity Tax Credit program when making new hires, you could be missing out on thousands of potential dollars per person.
HCM Solutions Can Help
In order to make the most of the WOTC program, you need to run a tight ship with respect to screening applicants in a timely manner, follow-up and thorough documentation. You'll also need to be aware of the variety of forms and applications you need to fill out to receive the credit. This can all be done manually, but the right HCM solution can help save both your financial team and your HR and recruiting teams a significant number of hours of work
With computer systems keyed in to bump qualified candidates into your hiring funnel faster, your HR team will be able to focus on what they do best — taking care of the people that make your brand tick.
While the Work Opportunity Tax Credit can mean a significant tax credit per eligible employee, there's still more out there for employers who are looking to optimize their hiring ROI. Forbes reports there is a wide variety of state tax credits and incentives for employing a wide range of candidates that have overcome adversity, such as veterans, ex-felons, disabled individuals and those in the lowest income brackets.
These incentives are meant to lift up the community as a whole by lowering the unemployment rate. If your organization has offices in a variety of states, it's a good idea to leverage your HCM solution to help with your tax credits and ensure all requirements, documentation and data is submitted correctly. With state-of-the-art mapping and quality control technology, as well as consistent contact with tax incentive professionals who can answer questions and assist in surmounting stumbling blocks, your finance team's productivity and efficiency can increase.
Offsetting some of the costs associated with employees is a critical responsibility for many finance leaders, but it can also quickly turn into a full-time job if you aren't careful. So it can be critical to find a trusted service provider that can offer valuable assistance in finding and pursuing credits for which your organization may be eligible, from contacting relevant government agencies to assisting in recruiting and screening applicants that meet requirements for various credit and incentive programs.
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