Cut the Cost of Hiring New Employees
As an employer, it's now a buyer's market, with a lot of good talent eager to find work and willing to accept lower paychecks and smaller benefits packages under the right circumstances. If you need help but are short on money, here are some innovative ways to build up your staff:
Offer what money can't buy. Some workers, particularly top professionals, are more interested in work arrangements that mesh with their personal lives (for example, flexible hours, less commuting time, and telecommuting opportunities). Stay open to compromise on work schedules and you can attract top people. Bonus: Generally, there is less absenteeism and turnover (additional cost savings to you) when employees have schedules that can accommodate their non-work responsibilities.
Use tax incentives. Hiring certain types of workers may entitle you to claim tax credits-a dollar-for-dollar reduction of your tax bill. Federal tax credits are available for hiring:
• Long-term family assistance recipients
• Certain veterans, ex-felons, vocational rehabilitation referrals, food stamp recipients, high-risk youths, SSI recipients and residents of the NYC Liberty Zone. Note: A modified credit is available for hiring certain teenagers for the summer.
• Employees residing and working in certain economically-distressed areas called empowerment zones
• Residents of Indian reservations
For more information about these tax credits, see IRS Publication 334, Tax Guide For Small Business (Chapter 4) at www.irs.gov. Also contact your state employment department for state incentives and hiring assistance.
Think outside the company box. Instead of taking on new employees, use independent contractors or workers through temporary agencies on a project-by-project basis. You can effectively customize your staff for a particular job and won't be carrying a large payroll during slow periods. Using outside workers eliminates your obligation for employment taxes, including workers' compensation and to provide benefits, such as health coverage.
Caution: You can't simply designate someone as an independent contractor who is in fact your employee-a person under your control with respect to when, where and how the work is done. For information about distinguishing between an employee and an independent contractor, see IRS Publication 15, Circular E, Employer's Tax Guide at www.irs.gov.
