Here's a summary assessment of the HIRE Act for the entrepreneur.
In March 18th 2010, President Obama signed into law a $17.5-billion jobs bill called the HIRE (Hiring Incentives to Restore Employment) Act. The bill includes subsidies for constructions bonds (state and local) and business tax credits, and moves $20-billion in highway trust fund.
So what, if any implications on hiring would this have for the entrepreneur?
* As an employer, you need to pay one-half of a worker's Social Security tax, which comes to 6.2%. But under HIRE, this payment will be exempted.
* The law specifically prohibits the firing of employees to make room for HIRE Act hires.
* An employee must be unemployed for at least 60 days before the hiring. So make sure you meet the verification requirements.
Some other things to consider include:
* The tax exemption is for employees hired between February 3, 2010, and January 1, 2011.
* If the worker stays for a year, then there will be an additional credit of $1,000.
* Relatives are not eligible.
* You cannot fire employees and rehire them so as to get the benefit.
Note: Forms and other paperwork related to this should be available soon from ADP, Paychex, Intuit or other payroll providers.
Bottom Line: This bill has some nice perks, but is it enough to encourage hiring?
New hires are usually paid less so if you pay someone $30,000 per year, then the savings will be $1,860.
This is a nice, but small benefit and will mostly have little or no real bearing on significant hiring decisions.
Another benefit in this bill is that Congress is going to extend the Section 179 deduction for equipment expenses. The amount will remain at $250,000.
This means that if you buy equipment then that purchase can be deducted in the first year instead of using depreciation, which means taking a depreciation expenses over three or more years. This could have a positive effect on entrepreneurs who need to make capital purchases soon.
By: Michael Chinn, Vice President & Founder
