After receiving the Employee Retention Tax Credit (ERTC) due to the pandemic, many small and midsize businesses have been inquiring about what other employment tax credits they may be eligible to receive. In a time when nearly every industry is cutting budgets, businesses of all sizes want to ensure that no tax-related opportunities are being left on the table, and who can blame them?
The Work Opportunity Tax Credit
In addition to ERTC, the Work Opportunity Tax Credit (WOTC) is something that all companies should be looking into. They should ask their payroll company about it as it pertains to new hires. More specifically, businesses should find out if their payroll company has the technology to automatically consolidate employment tax credits within their software.
Historically, WOTC has been cumbersome for small and mid-size businesses to take advantage of due to the necessary integrations into the hiring and payroll process, but with improvements in technology, this is no longer the case. Advanced payroll platforms have the ability to provide access to WOTC.
How it’s done: A payroll company can (or should be) automated so that before an employee’s very first day, the necessary information is gathered to assess employment tax credit eligibility. If an employee is eligible, your business can claim WOTC and other federal and state statutory tax credits without hassle or any extra paperwork. And the payoff is well worth it – qualifying businesses can receive up to $9,600 per qualified hire in tax credits through WOTC.
Beyond just the bottom line, WOTC provides immense value in expanding the labor market by financially incentivizing businesses to hire those facing employment barriers. WOTC, which was extended until 2025, is available to any employer who hires individuals from certain targeted groups who have consistently faced significant barriers to employment. People like unemployed or disabled veterans, SNAP recipients, re-entering ex-felons, qualified long-term unemployment recipients, and many more are eligible for WOTC. This can also help to combat labor shortages that so many industries are struggling with as they look to hire new employees.
A Payroll Company And WOTC
Gusto is a great example of a payroll company that is helping businesses claim WOTC. Chances are you have already heard of the platform – its software automates and simplifies company payroll, benefits, and HR for more than 300,000 small and medium-sized businesses in every state across the U.S.
We recently partnered with them and integrated our system into their platform to enable their customers to claim WOTC seamlessly. By doing so, we’ll be able to remove some of the barriers preventing small and medium-sized businesses from accessing the WOTC tax credits they deserve. We’ll be able to cut down the amount of time required to apply while also providing these businesses with peace of mind around compliance. Also, endless forms and confusing jargon that typically accompany the process have been left behind, empowering businesses of all sizes to take advantage.
Employment tax credits can play a big part in many businesses’ success, so payroll companies need integrated solutions to manage them automatically. Does your payroll company offer this? If not, you might be missing out.
Terracina Maxwell is the President & Co-Founder, Arvo Tech