Despite continuous sector growth, it remains no secret that industries across the board are currently facing a wide range of challenges impacting their bottom lines. For private business owners, skyrocketing expenses, skilled-labor shortages, and recent changes to the tax laws may lessen their ability to effectively compete within the marketplace. Many industries face similar barriers in achieving sustainability and financial success, therefore opportunities to optimize cost savings and increase earnings potential are ever important. For this reason, there has never been a better time for businesses to determine their eligibility for the employment-based Work Opportunity Tax Credit (WOTC).
Established in 1996, the WOTC is one of the most widely used federal tax incentives to date. The purpose of the WOTC is two-fold, in that both employers and employees can benefit. First, the WOTC aims to encourage businesses to hire from designated target groups within the workforce. Upon hiring these specific individuals, the employers receive compensation by means of a reduction in income tax liability. By reducing your tax rate, your business could benefit tremendously from reduced costs and surplus cash flows. Of equal importance is the WOTC’s solution of leveraging hourly-wage and entry-level individuals who are well equipped and openly available to fill the workforce shortage, which effectively solves two issues simultaneously.
The WOTC also benefits the individual employees comprising the 14 target groups published by the Department of Labor. Typically, the individuals within these groups are under-employed, such as disabled veterans, seasonal workers, or homeless community members. Besides the obvious benefit of gaining employment, the WOTC assists employees by building confidence, reducing their reliance on federal aid, and learning new skill sets. By incentivizing the employment of target groups, the WOTC provides greater opportunities for quality jobs which otherwise may not be obtainable.
Although the WOTC may sound like a complex undertaking, the benefits it produces are undeniable. The first step for a business in any industry is to speak with a tax professional and determine eligibility. In an economy where prices continue to rise, pressure to meet demands grows, and the workforce needed to get the job done is dwindling, determining your eligibility for the WOTC is definitely worth the call.
Please contact us at (401) 921-2000 or email John Rainone at email@example.com to learn more.