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NEW LEGISLATION BENEFITS SMALL BUSINESS
There has been a lot of legislation the last few years, but very few provisions to benefit small business.  Thanks to the new Hiring Incentives to Restore Employment (HIRE) Act and The Patient Protection and Affordable Care Act, small businesses finally have an opportunity to catch a break.

Under the HIRE Act, any employer (household employers are not eligible) who hires an unemployed worker from February 4, 2010 through December 31, 2010 may qualify for a payroll tax incentive, effectively exempting the employer from the 6.2% social security match on the wages.  The position must be new or open because the previous employee voluntarily left or left for cause.  Family members and other relatives do not qualify. 

In order to take advantage of this provision, the employer must get a statement from each eligible employee certifying that they were unemployed or worked fewer than 40 hours during the 60 days prior to beginning work.  Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, can be obtained on the IRS website or from us.

The credit is claimed on the quarterly payroll tax returns (Form 941), beginning with the second quarter of 2010.  Another provision of the HIRE act allows for up to a $1,000 general business tax credit on the business’ 2011 tax return for each employee retained for at least a year.  The credit is calculated at the lesser of 6.2% of wages paid or $1,000.

Under the Patient Protection and Affordable Care Act, small businesses are eligible for a credit of up to 35% of health insurance premiums paid in 2010 (25% for tax-exempt organizations).  It is available to employers with fewer than 25 full time equivalent employees, paying wages averaging less than $50,000 per employee annually. (Part-time employees wages are added together to make one full-time employee based on a 2,080 hour work year for purposes of the calculation)  Business owners and their family members are not included in the calculation.

For more information, check the IRS website or call one of our offices.