While many companies focus on retaining their workers through salary increases, one way to recruit new workers cost effectively is through tax credits. Many companies have learned the hard way that raising the salaries of their employees beyond a certain point will cause their overall costs will get out of control, emphasizing the need to use other methods to keep a low overhead.
The Growth And Training Tax Credit
This particular tax credit is offered by many states and emphasizes the training and growth of new employees. Employers who are eligible can receive a tax credit for each employee for as long as three years, which provides the dual advantage of highly trained workers at a lower cost. Apprenticeship credits are offered by some states as well as New Employment Tax Incentives.
The Tax Credit For Work Opportunity
The WOTC, or Work Opportunity Tax Credit, is extremely popular among employers as it prompts them to recruit individuals from specific groups which in the past have dealt with employment barriers. Examples of such individuals include welfare recipients, ex-convicts and veterans. While hiring someone with a criminal background can be discomforting, there are also benefits, such as transparency. In fact, Forbes has found that companies that chose to hire ex-cons actually experienced an increase in their bottom line due to the extensive federal records which are available on them, which provide deep insights into their psychological makeup.
The Enterprise Zone Tax Credit
This is another state tax credit that gives employers the opportunity to reduce their costs. This is done through giving credits to employers that perform certain property purchases or upgrades. The investment tax credit allows employers to make up to 3 percent on property investments which are business related. There are stipulations of course, such as the property needing to be used for a specific period of time while being depreciable and tangible. The zoning tax credit is also given to businesses that refurbish aging buildings.
Payroll Tax Reduction For Research And Development
Businesses of any size which are involved in research and development may be eligible for a tax credit. In the past, this credit had the stipulation of only being applicable to firms which were profitable. However, as of 2016, it is possible for non-profitable institutions to use the credit against the Social Security taxes of the employer, for as much as $250,000, as opposed to just state income taxes.
Tax Credit For Indian Employees
Companies that hire Indians (Native Americans) may also be eligible for a tax credit. This includes any organization that does business on Indian reservations or hires anyone who belongs to a tribe. This credit will be twenty percent of excess for the current wages which are qualified as well as employee health insurance which is qualified above the sum for the amount corresponding which are incurred or paid during a given calendar year. Making use of the many tax credits offered here will save employers tremendous amount of money, and every dollar saved is a dollar earned.