Planning use of the WOTC to save tax dollars
The “Starting a Successful Business from Scratch” manual advocates hiring employees when you can comfortably afford them. Typically, you would bring your first employees on board during the second phase of your business operation. This discussion describes how to use the WOTC when planning to bring employees on board in the future.
The moment your business begins to show a small profit you must make plans to hire potential employees. This only applies if you will be operating a business that requires them. The manual,describes hiring persons that have the potential to save money or provide other incentives such as tax credits. If you want to be certified in the federal government’s HUB Zone program, in addition to be located in one, 1/3 of your employees must live in a HUB Zone. One group targeted by the federal government to be eligible for this tax credit is qualified veterans. Employers hiring people that are qualified veterans may take advantage of the tax savings available through the WOTC.
A qualified veteran is certified as any of the following:
- A member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (EBT eligibility) for at least 3 months during the first year of employment.
- Unemployed for a period totaling at least 4 weeks (whether or not consecutive). But, less than 6 months in the 1-year period prior to the date of hire.
- Unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the one-year period ending on the date of hire.
- Entitled to compensation for a service-connected disability and hired not more than one year after being discharged or released from active duty in the U.S. Armed Forces.
- Entitled to compensation for a service-connected disability and unemployed for a period totaling at least six months (whether or not consecutive). This must occur in the one-year period that ended on the date of hire.
What you need to do for your company
If you are planning to start your own business or are already in business this is a credit which should be used for planning employee savings strategies. For further details on how you may qualify to get this credit read the instructions at www.irs.gov.