Weekly Tip
By Leslie Shiner, The Shiner Group
Do You Know About the HIRE Act?
Is business starting to pick up for you? Are you considering hiring a new employee? If so, you need to be aware of the HIRE Act. Back in March, President Obama signed the Hiring Incentive to Restore Employment Act (hence the name HIRE Act). It includes tax benefits that you just might be able to use.If you hire an unemployed worker, your business is exempt from the employers’ share of the Social Security tax. This means that you will not have to pay the 6.2% tax on wages paid from March 19, 2010 through December 31, 2010. If you pay a worker $25 per hour, for 40 hours per week, the savings amounts to $62 per week ($25 x 40 = $1,000 x 6.2% = $62). That’s $62 per week in payroll taxes that you won’t have to pay, ever! (The employee still needs to pay into the fund, so their deductions will not change.)
What’s the catch? Well, you need to hire qualified employees; those are workers who have been unemployed (or employed for less than 40 hours) during the 60-day period, which ends on the date you hire them. Individuals who were self-employed during the 60 days prior to the date of new employment are ineligible for the HIRE act tax credit. Also, the new employee must be an additional employee, meaning that you cannot get the tax credit if you are hiring him or her to replace another employee who was laid off. In plain English, you can’t fire someone, just to hire someone else to get this tax credit.And the benefit continues; if you keep this employee for at least year, you may be eligible for a general business tax credit in 2011.
While this may all sound like tax gobbledygook, you do not need to know all the details. Just know enough that if business is starting to improve, and you are thinking about hiring, now is the time to check with a tax professional to make sure you are getting all the benefits you can. Sometimes, there is such a thing as ‘free money.’
Leslie Shiner—author, speaker, and trainer—has more than twenty years experience as a financial and management consultant. She is the owner of The ShinerGroup, a consulting firm helping businesses gain financial control. As a business coach, she has worked with both small and large businesses to help them better understand their business practices and maximize their profits. She is the author of “A Simple Guide to Turning a Profit as a Contractor.” Ms Shiner is an engaging speaker with a long history of rave reviews. She continues to receive high praise for her ability to make financial management interesting, understandable, and even entertaining.
