Small businesses are the backbone of our economy, driving innovation, creating jobs, and fostering local communities. In an effort to support these enterprises and promote equal employment opportunities, the Work Opportunity Tax Credit (WOTC) program offers a range of benefits.
By participating in the WOTC program, small businesses can not only save on their tax liabilities but also contribute to a more inclusive workforce. However, there is on average $61B of WOTC credits that are missed out annually and the majority is because of a lack of participation by small businesses.
Let’s explore why small businesses should consider taking advantage of this program.
Cost Savings and Incentives
One of the primary advantages of participating in the WOTC program is the potential for significant cost savings. By hiring individuals from specific target groups, such as veterans, individuals with disabilities, and the long-term unemployed, small businesses become eligible for tax credits. These credits can offset their federal income tax liabilities, helping to alleviate the financial burden associated with hiring and training new employees.
Moreover, the program serves as an incentive for small businesses to diversify their workforce. By actively recruiting and hiring from these target groups, businesses gain access to a broader talent pool. These individuals often bring unique skills and perspectives, contributing to a more dynamic and innovative work environment.
Workforce Development and Retention
Participating in the WOTC program can be a catalyst for workforce development and retention. By providing employment opportunities to individuals who face barriers to employment, small businesses can empower these individuals, tap into their potential, and contribute to their personal and professional growth. Motivated and talented individuals from target groups can bring fresh ideas, creativity, and loyalty to the organization.
Not only does this enhance the company’s overall work culture, but it can also help reduce employee turnover. When individuals from target groups find meaningful employment and experience support from their employers, they are more likely to stay committed and dedicated to the organization. By fostering a supportive work environment, small businesses can nurture loyalty and create a positive atmosphere that benefits both the employees and the business itself.
Compliance with Diversity and Inclusion Initiatives
In today’s society, diversity and inclusion are fundamental values that resonate with employees and consumers alike. Participating in the WOTC program aligns with these initiatives and demonstrates a small business’s commitment to creating equal employment opportunities.
By actively recruiting and hiring individuals from target groups, businesses can showcase their dedication to diversity and inclusion, contributing to a more socially responsible and inclusive business image.
Support from WOTC Service Providers
Navigating tax credits and compliance requirements can be daunting, particularly for small business owners who already wear multiple hats. However, by participating in the WOTC program, small businesses can receive valuable support from WOTC service providers.
These providers specialize in managing the intricacies of the program, assisting with candidate identification, completing necessary paperwork, and maximizing available tax credits. By partnering with these experts, small businesses can streamline the process and focus on their core operations.
Final Thoughts
Participating in the Work Opportunity Tax Credit program can offer significant advantages to small businesses. Beyond the potential cost savings, the program enables businesses to contribute to a more diverse and inclusive workforce. By providing employment opportunities to individuals from target groups, small businesses can foster loyalty, enhance their work culture, and demonstrate their commitment to social responsibility.
If you’re a small business owner seeking to make a positive impact while benefiting from tax credits, exploring the Work Opportunity Tax Credit program is a wise step. Many small businesses rely on their CPA or accountant to find tax credits and, unfortunately, this isn’t a credit that is easy for them to execute.
It would require you to do most of the work and at Arvo, our mission is to make the tax credit process simple with very little, if any, lifting on your side. By collaborating with us and embracing the program’s opportunities, small businesses can thrive, make a difference, and play a vital role in shaping a more inclusive future.