WOTC: IS IT WORTH THE WORK?
Jeff Davis, TEAM Software General Manager & Director of Business, CALSAGA Network Partner
Manual screening and submission processes are usually tedious, even if they save you money. Industry-specific software can help you claim budget-saving tax credits easier and faster.
As a security company, it’s likely that labor costs are a significant hit to your annual budget. And, in the labor-intensive security industry, it’s not like you can make drastic cuts to curb labor costs and still maintain your service quality and retain your clients. While all of this may be true, it’s also true that there are tactics you can employ to save money on your bottom line, including leveraging the Work Opportunity Tax Credit (WOTC) program to offset your labor costs.
WOTC in a Nutshell
If you’re unfamiliar with WOTC, here’s the long and short of it: WOTC is a U.S. federal tax credit designed to promote the hiring of individuals from certain groups who have faced significant barriers to employment. When an individual from a qualifying group is hired, the employer can claim a federal tax credit against the employee’s paid wages, effectively lowering your company’s taxable income so you’re paying fewer taxes and ultimately saving more money.
But, is it worth the effort?
The answer is a resounding yes. With around 20-30% of employees being eligible for WOTC, there’s a high potential for earned credits your company could be taking advantage of. Let’s say, for example, that your company employs 250 guards. At a standard industry 100% turnover rate, it is estimated you could be seeing tax credit savings up to $40,000, as you can qualify for up to $9,600 in tax credit per eligible hire.
The effort — made easy.
Once you know the benefits, you want to simplify the process of claiming those credits as much as possible. It’s a process that can be labor-intensive, especially if you have to manually collect and collate data from multiple tracking systems. Integrated technology solutions help by:
- Logging your new hire in your software system.
- Automatically screening new hires.
- Submitting your payroll data.
- Collecting your tax credits.
As an added bonus, applicant tracking and onboarding solutions can directly embed WOTC into your onboarding process, eliminating the need to send links to employees altogether and automatically screening 100% of your new-hires for eligibility. While these solutions aren’t technically required when claiming tax credits, they can help do the legwork for you, so you can claim your credits faster. Either way, the potential of earned credits you could be missing out on is worth the steps it takes to identify eligible employees and file their information appropriately.
Remember, it’s important to do your own research, and consult your own legal and tax advisors when necessary, too. For more information on the WOTC tax credit, visit the United States Department of Labor WOTC page. For an estimate on just how much your company could be saving through tax credits like these, test out our calculator tool at teamsoftware.com/wotc-roi-calculator.