By Karen E. Klein
Bloomberg BusinessWeek
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Few small businesses are taking advantage of the HIRE Act’s 2010 payroll exemption and 2011 credit, says tax-credit consultant Brandon Edwards
The $18 billion jobs bill signed by President Barack Obama on Mar. 18 represents “the democratization of tax credits,” says Brandon Edwards, president of Los Angeles-based consulting firm The Tax Credit Company. Despite the legislation’s simplicity and availability to every U.S. business, Edwards estimates that 90 percent of small companies are unaware of the Hiring Incentives to Restore Employment (HIRE) Act, outlined at this page on the IRS Web site. Edwards says that companies can save as much as $7,621 per qualified employee under HIRE. He spoke recently to Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.
Karen E. Klein: The HIRE Act is part of a jobs bill passed in March. What’s different about it?
Brandon Edwards: In a lot of ways it’s unprecedented, particularly for small businesses. Many tax credits are so complicated and specific that smaller companies don’t qualify or don’t have the ability to pursue them. This bill spurs hiring by American businesses and every company in the country is eligible for it. Even small businesses can reasonably expect to collect benefits from it.
What are the benefits and how does a small business get them?
There are two incentives. The first is a payroll tax exemption that applies immediately and lasts through Dec. 31, 2010. The second is a $1,000 federal, dollar-for-dollar tax credit that will be available in the 2011 tax year. The way to qualify is to hire someone who has worked less than 41 hours in the prior 60 days and keep them on your payroll for at least 52 weeks.
