Sometimes the government passes legislation with big promises attached that never come to fruition. That’s been one of the main knocks against the $850 billion, 1588 page, Stimulus Bill of 2009. A lot of money, a lot of pages, a lot of press, but my wallet didn’t get that much fatter – how about yours?

Maybe you’re experiencing the same thing with the Hiring Incentives to Restore Employment (HIRE) Act, but YOU SHOULDN’T BE! I’ve talked with controllers from three staffing companies that use our staffing software, and they’ve all reported saving thousands of dollars through this legislation. For more on the specifics of the HIRE Act and how to take advantage of it in your staffing industry software check out:

• For the Staffing Industry, To HIRE Act or WOTC – that is the Question.
• Updating Your Staffing Software and Processes for the Federal Hiring Incentives to Restore Employment (HIRE) Act.

One Florida-based staffing firm reported thousands of dollars in savings since tracking and reporting on employees who qualify under the HIRE Act. Candidates, who have not worked more than 40 hours over the previous 60 days, sign an affidavit that the company developed to keep on record that these employees qualify under the HIRE Act. You can either develop your own affidavit or use the IRS’ Form W-11. Then they scan the signed affidavit and attach it to the candidate’s record in our staffing software. They also flag the candidate as qualifying for the HIRE Act within our fully integrated front and back office staffing software system, so that employer social security taxes aren’t calculated on these wages during Payroll.

I also got some hard numbers from two mid-Western staffing firms. One company is paying 69 people per week who qualify for the HIRE Act out of the 638 people they pay each week. During the first quarter they saved $11,000 on employer social security taxes. And this was just for two pay periods since the HIRE Act did not kick in until March 19th. At this rate, they will be saving $71,500/quarter ($11,000 * 6.5 pay periods) for the last three quarters of the year. With such substantial savings, they are pushing their staffing coordinators to be more proactive in getting qualifying candidates to sign the Form W-11. They have built in a strict “audit” process to make sure that candidates who sign the affidavit truly qualify for the HIRE Act. This results in some employees getting paid a few times before they flag them in our staffing industry software as qualifying for the HIRE Act, which means that they’re paying employer social security tax on wages that could be exempt. However, we did provide a process and report within our staffing software for them to recoup these savings, Use Your Staffing Software to Save Every Possible $ on the HIRE Act.

Another mid-Western staffing firm, which places many industrial workers, has been more proactive in getting qualifying candidates to sign the Form W-11, resulting in them not having to pay employer social security on 258 out of the 517 checks they cut each week. They also don’t have as strict of an audit process as the previous company mentioned, so they are able to flag employees as qualifying for the HIRE Act earlier on in the process – before the candidate receives their first or second check.

The key lesson from these three staffing companies is to make sure staffing coordinators are being proactive in determining if candidates have qualified for the HIRE Act. Here are three ways to do this: 

• Make sure they are armed with an affidavit or form W-11 for employees to sign.
• Make sure they know your company’s “audit” process, where to store the affidavit, and how to flag qualifying employees within your staffing software system.
• Make sure they know how much money your company can save by employing people who qualify for the HIRE Act.  Potentially consider incentifying this by offering staffing coordinators/recruiters a percentage of the total HIRE Act savings at the end of the year. 

Contact us if you have any HIRE Act related questions, or would like to see other ways we’re helping staffing companies make and save money through our fully integrated front and back office staffing software.

Everett Reiss
Director of Marketing and Communications
Applied Systems Technology
845-534-7100 X1102
ev@astusa.com
Connect with me on:
Linkedin: http://www.linkedin.com/in/everettreiss
Twitter: http://twitter.com/everettreiss

The Benefits of the HIRE Act for Staffing Firms

It’s been about 5 months that the Hiring Incentives to Restore Employment (HIRE Act) has been in place. The HIRE Act encourages employers to hire people who have been unemployed for 60 or more days by exempting their wages from the related employer social security taxes. For new hires to qualify for the HIRE Act and for their wages to be reported on the 941 as tax exempt from employer social security taxes, you need to get them to sign the form W-11. 

The Challenges that Staffing Firms Face

Our clients who use our staffing software are reporting the following challenges:

• Recruiters and staffing coordinators are not disciplined in asking applicants if they’ve been unemployed for the past 60 days (haven’t worked more than 40 total hours) and giving Form W-11s for qualifying applicants to sign.
• Applicants who are getting put on jobs are not returning their signed Form W-11s before receiving their first few paychecks.
• Staffing firms with a more stringent verification process to make sure all Form W-11 sign-ees truly qualify for the HIRE Act, do not start reaping the benefits from the legislation until the second or third paycheck.

These challenges, if not addressed, spell one thing for staffing firms: lost savings on money that is rightfully theirs through the HIRE Act due to uncollected or tardy Form W-11s.  

The Remedy to Take Full Advantage of the HIRE Act

For the previous quarter on the form 941, you can report the money that should have been saved on wages that should have been reported as exempt from employer social security taxes, but the key is that you need a report that can show you these wages. 

One Report You Should Run Out of Your Staffing Software

Here’s a report we were able to produce for our clients using the built in report writer that comes with our fully integrated front and back office staffing software system. The report prints the paycheck history of all employees who are flagged as qualifying for the HIRE Act and shows whether or not employer social security taxes (ER OASDI Cost, column I) were calculated for the employee’s paycheck. You can run the report for a range of check dates.  

In the example above, BERGER’s payroll record must not have been flagged in our staffing software when her 7/14/2010 check was cut. However, she turned in her Form W-11 in time for her 7/21/2010 check to be employer social security tax exempt. Nevertheless, with this report or a similar report a staffing firm can claim on the 3rd quarter’s 941 the $11.86 savings plus any other money they paid in exempt employer social security taxes. 

Other Staffing Industry HIRE Act Related Information

Here are some past informational staffing industry blog posts we’ve done on the HIRE Act: 

• For the Staffing Industry, To HIRE Act or WOTC – that is the Question
• Updating Your Staffing Software and Processes for the Federal Hiring Incentives to Restore Employment (HIRE) Act

Be sure to talk to your staffing software provider to see if they can provide you with a similar report that shows you the wages on which you’ve paid employer social security taxes that should have been exempt because of the HIRE Act.  Contact us if you have any HIRE Act related questions, or would like to see other ways we’re helping staffing companies make and save money through our fully integrated front and back office staffing software.  

Everett Reiss
Director of Marketing and Communications
Applied Systems Technology
845-534-7100 X1102
ev@astusa.com
Connect with me on:
Linkedin: http://www.linkedin.com/in/everettreiss
Twitter: http://twitter.com/everettreiss

3 Ways to Use Your Staffing Software to Grow Lean

Do you want your staffing agency to grow into an 8 Ton Elephant?

Recently, I stumbled upon Tukufu, the large elephant skeleton at The Oakes Museum at Messiah College. While the pearly white skeleton was quite a spectacle; I was more impressed with the raw facts about the size of these creatures: can grow up to 8 tons, and consumes 300-500 lbs/day of bark, leaves, branches, grass, and fruits to sustain itself.

Don't Be an Elephant! Use Your Staffing Software to Be Lean and Cheetah-Like!

That’s insane!  I really can’t imagine being that large and eating that quantity of roughage every day.  Plus, have you seen the cost of organic packs of hearts of romaine these days?!  I’ve always preferred to be more cheetah-like.  And I’m sure when you’ve been asked, “If you’re staffing agency could be any animal what would you like it to be?” (or perhaps a similar question but worded a bit more professionally), you’ve probably thought of something lean, flexible, mobile, and most importantly profitable!

Chances are, your business is in a great position to be lean and profitable, especially since you’ve probably carved the fat from your staffing firm’s operations since late-2008.  Now, the key is to stay lean as you grow; in other words, grow lean!  Typically as businesses grow, they pack on more operational mass, requiring them to consume an “elephant load” of their own revenue to sustain themselves.  However, if your staffing agency can grow while remaining operationally lean, then you’ll be making more profit per dollar of revenue you bring in.

3 ways your staffing software can help you grow lean, especially if it is a fully integrated front and back office system:

1. Get candidates to self-enter themselves through a web-based application that flows into the front office of your staffing industry software.

Each application can take between 5 and 15 minutes to data enter. This is too much time your service coordinators are doing busy work instead of value-added work (e.g. getting candidates to work, and making sure working candidates and clients are happy).  Your staff can save hours per week if applicants do the entry process themselves through a browser-based application, accessed from your website, a front lobby, or a kiosk.  Check out the web-enabled components of our staffing industry software.  Email me if you’d like to see a case study on how one of our clients saved $70,000/year using WebStaff, our web-based application tool.

2. Automate time capture.

The hours your temporary employees work are most likely reported to your staffing agency in all sorts of ways: paper timesheets, excel spreadsheets, and files from various timeclocks.  You don’t want all these hours to flow through the bottleneck of manual time entry.  See if you can import or setup imports in your staffing software for various types of files that you receive to process hours.  Also, look to speed up the your manual hours entry process with macros, or by entering hours on a spreadsheet that you can import into the back office side of your staffing software system.  Check out the time tracking and payroll side of our fully integrated staffing software.

3. Automatically email invoices and paystubs during your weekly pay/bill processing.

Giving your clients and candidates (esp. on direct deposit) the option to receive and access invoices and paystubs electronically can save your back office staff many hours each week in collating and stuffing envelops, and answering questions about invoices and checks.  See if your staffing software solution has electronic invoicing and paystub technology that can substantially reduce the weekly burden of your pay/bill process on your back office staff.
Email me for case studies on how two New York-based staffing firms are saving between $3,600 and $12,000 per year using the electronic invoicing and paystub components of our staffing software.

Contact us if you want more information about our fully integrated front and back office staffing software and the ways we’re helping staffing firms grow lean!

Everett Reiss
Director of Marketing and Communications
Applied Systems Technology
845-534-7100 X1102
Connect with me on:
Connect with me on:

• Linkedin: http://www.linkedin.com/in/everettreiss
• Twitter: http://twitter.com/everettreiss

While not as weighty or existential of a question as the one Prince Hamlet posed, the question of seeking tax credits related to the Hiring Incentives to Restore Employment (HIRE) Act or the Work Opportunity Tax Credit (WOTC) is especially relevant for professionals and companies in the staffing industry. 

You Can’t Do Both for an Employee

Employers cannot take advantage of both tax credits for an employee; you have to choose.  You can have some employees qualify for HIRE Act savings and other employees for WOTC, but you cannot benefit from both credits for one employee. 

The Greater the Risk, the Greater the Reward

Like most things in life, the option that is harder to qualify for, the WOTC, can yield greater tax credits for your staffing company.  However, the HIRE Act can save an employer over $6,000/year for an employee, which in certain circumstances is a greater savings than what you’d get with the WOTC.   

Sample HIRE Act Savings for Staffing Firms

The Maximum potential HIRE Act savings for an employee is $6,621.60 – 6.2% of the max social security taxable income of $106,800.  

 As you probably concluded, this is an unlikely scenario because you would have had to pay one of your qualified temporary employees enough to hit the social security cap of $106,800 between March 19, 2010 and December 31, 2010. 

 Here’s a more realistic scenario:

 You hire a qualified temporary employee making $500 per week, and save $1271 for the year.  6.2% of $500 is $31 in employer social security tax that you don’t have to pay.  Multiply the $31 by the 41 weeks you don’t have to pay social security tax for a qualified employee, and you get $1271. 

 If you keep that person on your payroll for 52 consecutive weeks, you could get an additional tax credit of $1000. 

 Therefore, through the HIRE Act you could save between $1271 and $2271 for that qualified employee. 

Potential WOTC Savings Per Employee for the Staffing Industry

Employers hiring employees that fit into such targeted groups as veterans, ex-felons, food stamp recipients, and summer youth employees, can reap WOTC savings of: 

• $2,400 for each new adult hire.
• $1,200 for each new summer youth hire.
• $4,800 for each new disabled veteran hire.
• $9,000 for each new long-term family assistance recipient hired over a two-year period.

Click here for a full list of the types of new hires that can qualify for WOTC.
For qualifying new hires, the savings under the WOTC are most likely higher than under the HIRE Act.  However it is more difficult for an employee to qualify because a state agency must certify that the employee is in one of the WOTC targeted groups.  

Making Your Decision

• First, decide if you are even going to go for WOTC, which entails:
  • Familiarizing yourself with the process, which includes taking potential qualifying employees through the screening process and sending the appropriate forms into your State Workforce/State Employment Security Agency’s WOTC coordinator.  
  • Or, talk with a company that offers WOTC processing services (e.g. Talx).
• Consider the industry you supply labor to.  If you are staffing the defense industry, then your employees could qualify for substantial WOTC tax credits if many are WOTC qualifying veterans.
• Be sure to consider the costs:
  • Of using an outside agency for either/both of the processing of WOTC and HIRE Act credits.
  • Of the administrative burden of the HIRE Act, which requires the employer to keep a signed copy of the affidavit; or the WOTC, which comes with a more lengthy approval process. 
• You may conclude that you want to keep it simple and just worry about the HIRE Act.
• If you are going for both WOTC and HIRE Act credits:
• Know the WOTC targeted groups and potential savings for each.
• Only go for the WOTC if the potential savings for the employee is significantly greater than the HIRE Act, and you feel confident that the person will qualify for that targeted group.
• Otherwise, if you know the employee qualifies for the HIRE Act, stick with that.
• Either way, make sure your new hire process is locked down tight!

WOTC and HIRE Act Resources for the Staffing Industry:

• IRS HIRE Act FAQ Website.
• State instructions on how to apply for the WOTC.
• Potential WOTC Savings and List of Targeted Groups.
• Linkedin Answers to the Question, “How Are Payroll Professionals Determining Whether the HIRE Act or WOTC is Better for Their Employee Population?”

 

I hope this helps you saving a great deal of money!  Let me know if you think there are any other factors that staffing executives and professionals should be considering when deciding to go for savings related to the WOTC or HIRE Act. 

 Also, contact us to discuss other ways we can help your staffing firm save money by combining automation through our staffing software and best practices from over 25 years of serving the staffing industry. 

 Special thanks to Kathleen Bodnar, Controller of Staffing Solutions Enterprises, Inc. who provided some valuable feedback on the decision-making processing staffing companies should go through regarding WOTC and HIRE Act tax credits. 

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