Tax Tips for Business Owners: Hiring Seasonal Help

If you own a retail business, chances are the holiday season will be one of the busiest times of the year for you. You’re thinking of adding some seaonal workers, but this is your first busy season, so where do you start? Here are some tips to keep in mind as you begin hiring:

Plan ahead

Plan in advance of the busy season so you can hire and adequately train your seasonal staff. Know your business: do sales increase around the holidays, or drop off? This is a key indicator of whether or not you need seasonal help. By planning ahead, you also have time to post the job opening and to interview, screen and hire applicants. Will you be hiring them as W2(payroll) employees or as independent contractors (employee pays their own taxes)? Make sure your new hires have all their paperwork completed in advance of their start date: W4 and I-9 for W2 employees, and W9 for independent contractors, in addition to any in-house paperwork specific to your business.

Job opening should ideally be posted in late October or early November for holiday hiring, or early spring for summer openings. Look for candidates whose skills, temperment and availability will match those of your business.

Look Into Employer Tax Breaks

If your business has less than 30 full-time employees, you may be eligible for certain tax breaks. Likewise, if you hire people that belong to disadvantaged groups, you could be eligible for the Work Opportunity Tax Credit. Qualified individuals include:

  • Summer youth employees who live in designated Empowerment Zones or Rural Renewal counties
  • SNAP (food stamp) clients
  • Ex-felons
  • Select military veterans
  • Long-term TANF (Temporary Aid to Needy Families) clients
  • Employees referred to you via Vocational Rehabilitation
  • SSI (Supplemental Security Income) recipients

If you hire a worker from any of the eligible groups, you can claim 40 percent of the first $3,000 earned by that person for a maximum credit of $1200.00 per eligible employee. You will not only help a disadvantaged individual gain valuable job experience, but you will also decrease your business’s overall tax liability at the end of the year.

Whether you own an online retail storefront or a brick-and-mortar storefront, peak buying periods can make or break a business. Staffing shortages and slow order turn-around can alienate busy shoppers and send them elsewhere. By preparing in advance and hiring adequate staff for your peak buying season, you’re ensuring your business will be around to seen another peak buying period next year.