Is That a Light in The Tunnel?
There’s optimism in the air. Many of the business people we speak with are seeing significant upticks in their business over the last few months. It seems that the proverbial spigot opened and orders are flowing in. The Dow Jones Industrial Average surpassed the 11,000 mark and stayed there for over a week now. Employers are taking advantage of the social security tax breaks which will save them from paying the employers portion of the 6.2% social security taxes.
In Florida, the legislature determined that a 1200% increase in unemployment taxes was too much for companies to bear and thankfully lowered the minimum taxes on unemployment and also lowered the maximum of taxable income from $8,500 back to the 2009 level of $7,000. Many other states have followed this example.
Are you ready for increased business?
We weren’t. It is still creating some issues today. At McKenzieHR, we were taken by surprise by the increased level of business that started in January and has not stopped. January has traditionally been a relatively slow month for us, but in 2010 it was our best month since July of 2007. We are still scrambling a little to keep up, but remedying it by hiring additional people. Welcome to Terrie McDonald who joined us in February as a Client Services Specialist and Tamara Joiner, a Senior Human Resources Advisor who joined us a few weeks ago. It has relieved the pressure.
After the economic downturn of 2008 and 2009, we have one of those good problems to have – yet it is still a problem and no amount of planning could have predicted the business increase from December of 2009 to January of 2010. Now I am probably jinxing us by stating this, but if our business is going in the right direction, many others are as well.
Are you ready for some business?
Many organizations have downsized to the point that they are not prepared. I was told that recruitment firms are struggling to keep up with the demand. Some have closed offices and others working with skeleton crews have seen such a big increase in job orders that they cannot handle it. This is a good problem to have – but still a problem if they can’t produce.
Do you have a plan to increase employees if needed? Do you have a relationship with a temporary firm or a staffing agency to get people to you quickly? Do you have applicants or former employees in the wings that you can bring aboard?
Do you know of the tax advantages available today?
The Hire Act was passed last month in which employers can be relived of paying the employer portion of their social security taxes if the employee was not employed for 60 days from being hired by you. All that needs to be done is have the employee complete a W-11 form. The IRS will be issuing new 941 forms soon so employers can take advantage of this tax break. We have posted the W-11 on our website (bottom right side of the home page) This form should become a part of your new hire paperwork. In addition to the social security breaks, if the employee stays with you for 52 weeks, the employer will be eligible for a tax credit of $1,000 on their 2011 taxes.
Do you know of the other tax credits available?
Under the Work Opportunity Tax Credit Program, by hiring individuals from certain targeted groups, employers can reduce their taxes up to $2,400 or $4,800 during the first year of employment or up to $9,000 over two years, depending on the qualified applicant. The targeted groups are: Qualified Temporary Assistance to Needy Families Recipients, Qualified Veterans/Disabled Veterans, Qualified Ex-felons, Designated Community Residents, Vocational Rehabilitation Referrals, Qualified Summer Youths, Qualified Food Stamp Recipients, Qualified Supplemental Security Income Recipients and Long-Term Family Assistance Recipients. The American Recovery and Reinvestment Act of 2009 expanded the Work Opportunity Tax Credit to include disconnected youth and unemployed veteran. Keep in mind that these tax credits are only available for private, for profit organizations.
These programs do not create jobs and they should not influence hiring decisions, but they do allow companies to save money that can be used to re-invest in the organizations. Investment in business growth has been stagnant for over two years now. If you are hiring, take advantage of the cost savings available to you.
Get your Hustle Up
(This is a Tamara Joiner-ism and a phrase we will be using more in the future)
Get moving and get to planning and do it soon.
Gotta get your hustle up just to keep up.