Do You Know How the HIRE Act Will Affect Your Business?

March 30, 2010

President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act into law a few weeks ago. There are a number of incentives and benefits to employers, which are intended to encourage hiring and business investment.  If you haven’t already researched whether your company can benefit from these tax credits, please check into it and consult with your tax advisor.

For instance, employers can take an exemption from the 6.2% Employer Social Security Tax if they hire previously unemployed individuals who have worked less than 40 hours during the 60-day period prior to employment and whose 2010 earned wages meet certain maximum criteria.  This can equate to a savings of $6,622 per qualifying worker. There is NO cap or limit on the total amount of tax benefits that can be claimed by an employer.

Another benefit is that employers will receive an income tax credit of either $1,000 or 6.2% of wages paid, whichever is less, for hiring previously unemployed individuals meeting certain criteria.

The Act also extends a provision through December 2010 allowing the write off of $250,000 of capital expenditures for tax purposes (a provision which had expired on December 31, 2009).

In addition, the Act contains new tax and reporting compliance requirements related to foreign accounts, and we would recommend that you consult a tax advisor if your company has foreign operations or hold foreign assets.

OpenView Venture Partners is an expansion stage venture fund that provides financial consulting services and strategic consulting services to our portfolio companies. We are not tax advisors, but we’ve passed this information along about the HIRE Act since we feel that these tax credits might help to provide immediate cash flow enhancements to your company.