Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent

Best of 2024 compilation
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Mike: [00:00:00] I'm just going to start out by saying there's just no way businesses could possibly know all the nuance to the Fair Labor Standards Act. It is so big. It is so complex.

Mary: Well, I I'll tell you a secret and I, I'm not embarrassed to say that after 30 plus years working with people. Um, having an assurance certification, I would tell you that I don't even know every single thing there is to know about FLSA because it can be very specific. There's always something that trips you up. [00:01:00] four of the five questions we asked, I think, beg for consistency. Can you tell us what that means and why it's so important to be consistent in all four of

Mike: those

Mary: As soon as we're not consistent, we're triggering exposure to litigation because treating individuals differently may lead to a discrimination case. So it may be, you know, you gave, um, something positive to everybody. So, you know, maybe everybody got, um, Further to, you know, once they're employees, you gave training to all the males in the organization, but not the females.

You can see the inconsistency there. That [00:02:00] makes a lot of sense. But, but if we said, oh, I don't like the way Mike looks when he comes in for an interview, I'm going to make him fill out an application. Because there's something about him I don't like. And then the next candidate comes in, and I don't, for the same exact position, and they don't, we don't ask them to fill out an application, but you're like, he's a nice young kid.

I like, come on in, you know, and you don't have to fill out an application. It's the same. We're still putting ourselves in a position where we've treated two individuals differently, uh, and that makes us, uh, susceptible to litigation. Beyond litigation, because, you know, people are going to be on the call and go, Oh, Mary, I don't think I'm going to get audited.

I'm fine. And, um, I love your positive attitude, but I doubt it. Bye. Bye. Let's think about consistency as [00:03:00] far as solving what we want done. If you don't give everybody an application, at least for all the same positions. So maybe you say, all my warehouse workers, I want to fill out applications because they rarely have a resume, but the other positions, I'm okay, not filling out an application.

That's fine as well, because we're consistent within a class of a position. But think about the consistency here. If we only gave the application to some warehouse workers, how are we comparing two candidates when one, one, let's say you went for a warehouse position and I went for a warehouse position and they didn't give me an application, but they gave you one.

How are they doing a fair comparison to make sure that they successfully interview and choose the best candidate? So the consistency is good. So that the HR function is successful. And the other reason [00:04:00] is to protect you from litigation.

Mike: And I got a few thoughts jumping through my head. I mean, one is your employers are going to talk, right? I mean, so if you're a great boss, most of your employees love you. There's going to be somebody Right, right. think you're all The first person you treat differently

they're, and they're going to talk to each other.

And they're going to compare notes. in the aggrieved person, even if, even if they haven't been aggrieved, but they feel aggrieved, they're going to see the fact pattern to validate how they feel, right? Um, so yeah, you have to be consistent. I think about the interview process. Well, I'm consistent. I ask everybody, tell me about your weekend.

That's the same question. But Depending on how they respond to that, the follow up questions, by definition,

could never be consistent, right? You could, however, ask the question, tell me about a time you disagreed with your boss. What was it? How did you handle it? What was the [00:05:00] outcome? Right? You're going to get a pretty good sense how they deal with conflict.

Tell me about a time that you had to deal with conflict with a co worker. What was

it? How did you handle it? What was the outcome? Right? So there you can be extremely consistent. You're still going to get a feel for what that person is like and how they

handle handle themselves. Right? Let's close by coming back up to the top level.

So we, we, we talked about the differences in the scores question by question. Um, I think the punchline here is, uh, it was bookended job descriptions. And are you certain your applications don't ask you legal questions? Had the smallest spread, only a four percentage point difference between zero growth firms and fast growth firms.

Um, We kind of, you and I, I think,

agree that people just, they don't know what they don't know, and they're probably way more off, but they're probably

equally off on this one, right? Though it's not a huge correlation to success because [00:06:00] they, the, the, the, the short spread. The biggest difference, uh, between the fast growth at 81 percent and the zero growth firms at 65 percent was do you conduct background checks?

To me, this is just a, I am willing to spend the money to make sure I'm getting this right. They know how critical it is to get the right people in the organization. You know, we'll talk about

performance management, onboarding, all that kind of stuff in future episodes as we, as we unpack the rest of, you know, the, the ebook, right.

Um, But that's the one category that, that you got to put your, put your money where your mouth is, because you're gonna have

to, have to, pay for these background checks. And I think the flask growth firms demonstrate that this is, that this is the most important in

Mary: I agree, I agree, I mean, I I love that you, that you drew the line with the consistency, that that's, that's what has to be here. And I, and, you know, again, I think they, some, some of the [00:07:00] data might be skewed by, you don't know what you don't know and the difference between doing it and doing it compliantly.

Mike: Yeah, right. So it, I'd say in closing on this topic, when we average all, so again, eight, categories from pre employment to post employment. This is the first category, recruiting and hiring. Those five questions, we broke down the question by question. If I add all of them up, so all five questions, uh, zero growth firms, so people not growing, said yes, 75 percent to all of the five questions.

Fast growth firms said yes, 86 percent of the time. So it's an 11 percentage point spread. What's fascinating to me. And I think people could just dismiss this out of hand. There's compliance oriented HR that is more administrative. And then there's, I just need [00:08:00] really talented people who can go, you know, raise the bar on performance and productivity.

And this kind of calls bullshit, and forgive my language, because there's a lot of compliance oriented questions here. And the spread is still 11 percentage points. Fast Growth Firms. Fast revenue growth is just simply following the HR best practices around compliance for recruiting and hiring folks has an 11 percent advantage in

revenue growth. Now, Mary, why don't you bring us home on this one? 11 percentage point difference in all the best practices for recruiting and hiring. What's your guidance for the zero growth companies? Um, why do you think the correlation is so strong

in Well, I, I, you know, listen, no company is, is going to be successful without the right people in the right places. [00:09:00] And so this piece. Has to be done right. Um, so number one, you want to bring on the best people. And unless you're focusing on that, that onboarding piece that we just discussed, the ad being, you know, setting expectations so we give a good job preview, the interviewing being done correctly, doing the background check, right?

Mary: Uh, having a compliant ad. That's it. First things first, let's get the right people. Second piece, let's do it compliantly so we don't then also have a lawsuit that's going to take us down. So, the small group organizations need to, I think, you know, you just want to double down on the HR and not only do it, but ensure that you're doing it compliantly and solving to, the result that you want.

What's the result that I want? We all want the best. people to help us be successful and make [00:10:00] the organization a fast growing company. If you do it right the first time, that is going to follow. and I think that's the correlation to me is that the fast growth companies are doing these, uh, different HR functions compliantly and successfully, and that helps them bring the best people on, which then helps you grow.

Mike: If you want to go fast, go alone. If you want to go far, you need a team. If you want to have a, have a longterm successful growing business, you're going to need people and, uh, finding people in this war for talent is harder than it's ever been, and it's not going to get easier if you don't make recruiting and hiring a priority.

Um, you're going to have strong, strong headwinds, uh, in your growth. So you

Mary: Yeah.

Mike: is something you just got to get right.

Mary: I, I think exactly what you said. I think, uh, it's not enough. Google does not work anymore. I think you, [00:11:00] you need some assistance to get this right. And it, in the end, it definitely pays off

Mike: I'm just going to start out by saying there's just no way businesses could possibly know all the nuance to the Fair Labor Standards Act. It is so big. It is so complex. Um, we asked the question, are you certain you are compliant with wage and hour requirements according to the FLSA?

84 percent of zero growth firms said yes. 92 percent of fast growth firms said yes. So it's not just that it's a small spread of 8%. There's not a huge correlation. Everybody is very confident that they are. Um, let's say you, Mary Simmons.

Mary: Well, I I'll tell you a secret and I, I'm not embarrassed to say that after 30 plus years working with people. Um, having an assurance certification, I [00:12:00] would tell you that I don't even know every single thing there is to know about FLSA because it can be very specific. There's always something that trips you up.

What does FLSA do? Right? The word, the name kind of tells you Fair Labor Standards Act. What they were trying to do is set a standard. So what don't they do? They don't tell you that you have to take vacation, that you have to give vacation. What they, so they don't go that route. What they say is how you pay your employees.

That's why it's named wage and hour, right? Um, that's kind of the layman. Layman term for it. So how do you pay your employees? What breaks do they have to have? Now, don't forget, you're going to have state and then local law layered on top of FLSA. Your employees get the best of those laws. So in our states, and listen, it's not, [00:13:00] everybody just thinks it's New York on one coast and California on, on the other coast and every other area is, you know, fine and there's no laws.

Not true. Massachusetts, Colorado, um, Hawaii, um, their Department of Labor's and many other states, uh, Washington State will have other, uh, laws that govern how we pay our employees. The overtime, right? So a couple of states, it's not just California, um, you know, have a nuance to the overtime. Uh, travel pay, right?

And a lot of employers go, what? And I'm like, well, you know, if you have an employee go to a client or travel to another one of your stores or, you know, uh, restaurants, et cetera, what happens then? What happens if they have to fly someplace? How do you pay them? There are [00:14:00] so many nuances here that I challenge the, the affirmative.

I like, I like the energy and I like the positivity, but I will challenge because, you know, as an HR professional, this is quicksand. And you, I study this, I probably read an article, I read an article every day on HR, but wage an hour at least twice a week will, will be the topic.

Mike: Yeah.

Mary: It's a lot to it.

Mike: Is it safe to say that most small business leaders, owners, or managers, when they think They think wage and hour, they think minimum wage, they think overtime, they think, uh, maybe maybe they think travel pay and do I have to pay breaks? It probably doesn't go a lot deeper than that.

Mary: Yeah.

Mike: Yeah,

Mary: And probably the, the biggest area where I find the [00:15:00] confusion is you do not have a choice people. All of your employees are exempt or non exempt. There's no in between. You don't make that decision. The employee doesn't make that decision. It's a duties test and that's what drives the exemption.

Um, so, you know, I was on a call with an employer trying to help them with the changes in FLSA. And they had no idea what exempt or non exempt meant. They're like, I just pay them all salary. That's what they want. It's easier for them. I'm like, okay, do you have an hour? Cause that's what it takes

Mike: yeah,

right. walk through this.

There's no such thing as I'm a sal, they're a salaried employee or an hourly employee. They're exempt or they're non exempt. And the law is very specific. What qualifies for both of those categories? You don't get to choose. You just have to follow the law. And I think, I mean, fair to say [00:16:00] you walk into businesses and people get that one wrong almost every day.

Mary: Almost every day, even HR professionals, right? If we're working with an HR professional and I've been and I've been there sometimes, you know, when you're internal, you know, it's hard to get out of the weeds and you're like, but that position's always been exempt. Right, so you just, you can't get on the balcony and kind of look at it objectively and we'll be like.

All right, let's walk through this. Do they do this? Do they do that? You know, it takes, you have to have a good job description to go with that. So that's where that HR function, you need a function, to make that, you know, to, hit all of these laws correctly.

Mike: We've been working together too long, Larry, because that's exactly where I was going to go. So topic number one, uh, episode number one in this series, recruiting and hiring, question number one in that section, do you have written job descriptions for each opening? So. Here we are [00:17:00] midway through the series and we're talking about the topic of compliance.

Are you certain you're compliant with wage and hour? It goes back to your job description. And are you writing the job descriptions? in such a way, like maybe, maybe the business, maybe because of the way your P& L works, the way you're monetize this industry or your offering, maybe you need it to be quote unquote hourly, or you need it to be salary.

Mary: Yeah,

Mike: You don't get to decide after you've hired them what you put them you need to write the job description that back that backs into The FLSA requirements, right? And so these things are circular. It's like, we, we understand and respect. Maybe you need to, to, to level out, uh, your expenses to make, uh, expense forecasting easier.

So you need people on salary. Okay. But that means you've got to write the job descriptions right in the first place. You've got to hire those. You've got to manage performance accordingly. [00:18:00] This is, this is all hyperlinked to

Mary: All related. Yeah. I love that. Hyperlinked.

Mike: I'm going to kind of, I'm going to give you the last word here.

Here's my recap. 57%, and I'm going to focus on the small businesses because I think they're, it's clear, they're the folks who struggle the most with compliance. The data is really clear on this. 57 percent of zero growth firms said yes to all five questions we just reviewed. 82 percent of fast growth firms said yes.

To all five questions for under 25 employees, 25 percentage points swing. And something that I think most businesses would not correlate to revenue growth. There's they think of, okay, there's the. There's the administrative side of HR, which is following the laws and it's the boring stuff and okay, I got to do it.

But if I don't do it, am I really going to get caught? I'll, run that risk. And then there's the soft stuff of HR, which is [00:19:00] finding talent, recruiting them, bringing on board, developing them, retaining them, and this is just crystal clear, they are completely intertwined. The companies who take compliance serious, it's part of the employee management function.

It's part of the employee relationship. It's part of trust and respect between you and your employees. And the correlation is massive, a 25 percent difference from fast growth to zero growth firms for revenue growth around compliance. Mary, you get the final word.

Mary: agreed. Um, I would say that compliance is not an option. so there are areas where we have to follow compliance and I've had business owners say, okay, what's the over under? I'm like, what? They're like, okay, if I get sued for this, you know, what's it going to cost me? I'll take the chance. that's not the only reason to follow compliance is not so that you don't get caught in an audit.

I [00:20:00] want everybody to, see the correlation to, you know, being compliant makes for happier employees, right? It helps retain them because there could be an inexpensive, option or an absolutely free option, like offering family medical leave. Does not cost an employer anything. Yes, that person is not going to be there, but it beats them resigning.

So, look at it as though when we follow compliance, that it is an employee experience to help them be more productive for your organization and to protect your organization. So, it's both.

Mike: Yeah, couldn't have said it better

Mike Vannoy: What's the number one thing that business owners, especially small business owners, need to understand about 401k?

Richard Tatum: Yeah, great question. I think that what's really changed over the years in my career is that, um, 401k has become its own [00:21:00] brand and, um, where it used to be a perk for employees, according to our survey last year, 85 percent of workers want a 401k plan. It's a prerequisite for them when looking at a potential employer.

So I think it's really become a table stakes item for employees. Um, and so that really helps small businesses with attracting and retaining. their employees, which I know is important to all small business owners.

Mike Vannoy: Say more about that, that evolution. Cause like, I mean, I, I, I grew up in an entrepreneurial home. I remember as a young entrepreneur, myself being involved in businesses, exploring 401k in, uh, for the first couple of businesses I was involved in. I mean, candidly, I think I was just intimidated out of it.

Right. Uh, I knew it was something that. Uh, employees asked about, I wouldn't say they demanded, um, but probably the employers had more leverage than they, then than they do now. Um, but it was, but it's always been something that was interesting, but I think so many small businesses are just, they have been afraid of it.

There's a [00:22:00] handful of reasons, but, but I want to hear your thoughts.

Richard Tatum: Yeah. So 401ks can be complex if they're not set up correctly. And I think what you've seen in the evolution of our industry is that, uh, you have more, Uh, firms that specialize in 401k now and can really handhold small business owners through setting that up, you know, I was a small business owner for many years myself.

And you've got so many different things on your plate, trying to run your business, trying to Make sure that you grow your business. You've got all these different benefits like health insurance and other things. So the 401k could be intimidating because of the complexity, but I know that a lot of businesses maybe even had a bad experience at some point and shut their plan down.

And so now, it's easier and more cost effective than ever to set up a 401k plan. And a lot of the legislation has made it more manageable. And service providers out there have made it more of a turnkey solution where it's easy for an SMB to say, hey, [00:23:00] okay, I want to start this plan and make that a really simple process.

So, it's a combination of evolving legislation in the industry, just trying to make it as easy as possible for small business owners.

Mike Vannoy: Uh, Richard, what specifically, what, uh, without getting too wonky, what specific legislation changed to make this thing more, more accessible to small businesses?

Richard Tatum: Yeah, you really saw a trend starting back in 01. There was a big tax, um, plan that that raised the amounts that employees could contribute. You saw the Pension Protection Act in 06, and then recently you've seen the SECURE Act and SECURE 2. 0. And what those acts really did was make it more cost effective for small business owners to start plans and look at certain things like automatic enrollment, which we can talk about in more detail, and how do you get employees who may be intimidated by the enrollment process.

You know, I'm in the 401k business and one of the last [00:24:00] things I want to do at night is go home and make. Decisions about my retirement savings and retirement readiness. And so a lot of people in our industry have adopted automatic enrollment programs. When I say people, I mean, small business owners, financial advisors, payroll companies.

And so those automatic enrollment programs help get people off the sidelines, help get them saving and workers are so much more likely to save. Um, and an employer sponsored plan. So it's just become a lot easier, a lot more cost effective and, and the industry helps small businesses avoid some of the pitfalls that would have been big pain points, you know, 20 years ago.

Mike Vannoy: am I thinking about this right to almost put it into three, three buckets of complexity? Um, until somewhat recent, there's a technological complexity that, uh, just how do I create the technology and make it accessible for me to administer my employees to access, make choices, integrate to payroll, et cetera.

So there's a tech component. There's a legislative [00:25:00] component. Um, uh, maybe not just legislative, but an administrative component, like, uh, scary words like plan sponsor. What the heck is a plan sponsor? And what does it mean for me and what kind of liabilities I now have? Uh, and then there's the actual funds themselves.

I mean, shoot, forget wrapped in a 401k, just all the options out there. There, there are to invest, uh, pick stocks, mutual funds, indexes. There, there's just so many choices that if you're not a. A savvy investor that, that that's intimidating in and of itself. It, it, it, am I fair putting it in those three buckets?

Richard Tatum: Yeah.

I think so. Um, you know, a funny trip down memory lane when I first got into the business in the late nineties, a lot of plans would offer 50, 70 different mutual fund options. And back then the stock market was going gangbusters. So everybody was. Making great returns every year. And as you know, we've, we've been through a couple of bear markets and, and that was scary for workers who were putting in [00:26:00] their, their hard earned dollars into these plans and seeing those account balances go down.

So you saw the industry really evolve with things like, uh, risk based allocation funds, lifestyle funds, they're sometimes referred to as. You saw the next evolution with target date funds where, um, you know, once again, that yellow brick road to, to making it easy for employees to save. They could look at, um, how old they were and when they plan to retire and pick a fund that aligned to that target.

And what you're seeing now is the evolution of managed accounts where employees can once again look at their time horizon for when they want to retire. And then they can look at their risk tolerance and, and, and they don't have to get into the minutia of picking different funds and their classes and, and things like that.

So it really becomes more of a decision around how much do I need to be saving to be successful and less about the investments and, and what they need to be choosing there. in your other buckets there, you know, you [00:27:00] mentioned administration being difficult. You've seen the industry respond to that as well.

And there was a big ask on small business owners when the industry really started growing. And what you've seen is technology has improved. Most payroll companies are integrating with different record keepers. And how that makes it easy on the small business owner is they don't have to touch the 401k plan every pay date.

Those those pieces of information are sent over automatically and it's managed for them in real time. So Plans are staying in compliance and the data is up to date, which helps with outcomes, you know, for the workers and things of that nature. Um, but you're also seeing the evolution of, you know, the industry's really bad about using anacronyms that maybe small business owners can't relate to, but there's fiduciary services involved now where service providers can take over some of that responsibility and liability that used to sit on small business owner's shoulders.

And now they can hire a [00:28:00] professional firm who can take on that liability and make sure that things like the tax form at year end, that's called the 5500, is signed for the small business owner. They don't have to worry about that. You know, if someone leaves the company, wants to roll their money over, that's handled for them.

So the takeaway has really become a more of a do it for me approach. And, um, you know, there's one thing that Congress has been able to align upon, and that's that people need to be saving for retirement. We've got a big savings gap here in America on many fronts, and that's where you've seen the legislation really involved.

And so credit to, you know, our Representatives who've come together on that and expanded, you know, tax credits for small businesses, expanded the amount that people can save. And, um, that coupled with the evolution in the industry has just made it much easier and cost effective to start these plans.

Mike: What's, what's the number one thing that they need to know about employer based tax credits?

Shannon Scott: Well, I think, you know, obviously, like you said, the headlines in the last couple of years has been about the [00:29:00] Employee Retention Credit. Um, obviously, you know, a lot of different small business programs came out because of COVID. I think we all remember the PPP loans. Um, you know, and what people need to know is, so, Small businesses typically and mid sized businesses typically don't take advantage of these credits simply because they're not educated on these programs.

Um, you know, I always like to say the IRS doesn't hold classes on how to avoid paying taxes, right? That's just not something they do. They don't issue a lot of memos on these things. Now, you see large employers take advantage of these things all the time because they have internal tax teams, they have internal tax lawyers, and they can research and have the bandwidth to research these types of programs.

But these things have been around. for decades and decades and decades. Um, the problem is typically small businesses, they're getting their tax returns filed by a CPA. Um, CPAs are not expected to be experts at these kinds of things. Uh, you know, if you read a tax law guide, it's about 1, 500 pages long of about, You know, 8 point font.

It's the most boring document in the world to read. [00:30:00] But tax credits typically, and the ones we're going to talk about today, cover just a few paragraphs of that, right? You know, so, um, there's a lot of technology that needs to go in to being able to process these things, and there's a lot of research, um, that goes in because these credits are not just, from a federal perspective, they're state, they're local, there's thousands of these things.

And so, you know, groups like us are the ones that do all the education and make sure that everybody's processing it, uh, you know. Accurately, completely, um, you know, it's just, the tools are, are not available to the small businesses that they are to the larger businesses. And that's where we're trying to reach out to the masses and say, Hey guys, just because you're a small business doesn't mean you can't take advantage of the same things that you see these larger and fortune 500 corporations taking advantage of.

Mike: She, let's maybe just kind of get def definitional here. So what, what exactly is an employer tax credit?

Shannon Scott: So it can vary depending on the type of tax credits. Uh, they're typically an [00:31:00] income tax reduction. Uh, so what it is, if you have an income tax liability from a federal government. or state governments at the end of the year. These types of incentive programs will reduce the amount of taxes you owe to the federal or state government in an income tax situation.

There are other types of credits. Some can be applied to payroll taxes, but majority of the credits that we're going to talk about, especially cover today, are income tax base.

Mike: Okay. So, so whereas ERTC, that was, that was a payroll tax deduction. And so most of the time here, we're talking about. Uh, coming right off of your, your income tax. Does it matter? Uh, sole proprietor S Corp, C Corp, how does that play in?

Shannon Scott: In most cases, it doesn't matter. It just matters how they're applied. You know, in a situation like a sub S or an LLC. The tax credits will flow through to the individuals, just like any tax liability [00:32:00] does when you get your K ones at the end of the year. Whereas C Corp, it's gonna flow to the company, so the company's actually gonna get the advantage of the income tax reduction.

And I will just point out the difference in the, in the employee retention credit and why they made it a payroll tax credit was because obviously during covid when a lot of the businesses had to shut down, there was no revenues coming in. So what you had at the end of 2021 and 2020 was a lot of businesses didn't owe income taxes.

Because of the lack of revenue, so they had to find an alternative way to let employers take advantage of that without, with the understanding that a lot of these companies were not going to be in a profitable situation.

Mike: Well, and when the CARES Act passed end of March of 2020, I mean, We, we, we didn't know that the sky was falling. We didn't know, was this going to be the two week temporary shutdown to, to, to bend the curve? Or was, you know, nobody probably knew it was going to be a two year thing. Like I ended up being, they literally were just erring on the side of caution and putting cash in employers hands to, to keep people employed and keep them getting a [00:33:00] paycheck just so society wouldn't collapse, right?

Really a different scenario than, than what we're talking about the, the traditional employer based tax credit. So maybe before we get, and so I, so I jumped ahead per perhaps a bit, but, so, uh, it doesn't matter LLC, uh, uh, s corp, uh, or if you're a C Corp. In, in, in, in any, in any case, these generally fall to an income, income tax, uh, uh, uh, deduction or reduction, I should say.

Other. Are there other types of criteria? What are the types of criteria to be able to get these types of credits?

Shannon Scott: So there's, there's multiple types of criteria. Let's just cover a few here. Um, the income tax, Yes, it is a reduction on your future income taxes, but there are credits out there from the federal government that you could go back three years and amend return and actually get a cash refund on. Um, just, but you would have to amend a return to do that.

So there are some refundable, what we call refundable incentives out there. Now, [00:34:00] in order to take advantage of these credits, typically, obviously you need a tax liability, right? If you're not paying taxes, you probably don't need to use tax credits or incentives. But these are typically based on either where your business is located geographically or the demographics of, of the types of individuals you're hiring typically on a daily basis, where we're seeing a higher qualification rate is typically people who are hiring with high turnover rates, because a lot of these incentives are based on hiring, you know, types of individuals from certain demographic groups.

They're trying to pump up, you know, categories like veterans, disabled veterans, uh, felons, people who are receiving, you know, food stamps, welfare. Um, trying to, cause these typically, you know, what they've seen the department of labor and the research and wisdom and said, these two groups are having a higher barrier to employment for whatever reason.

Um, so they're trying to encourage employers to hire from these groups, giving them a fair chance and saying, if you do that, We'll incentivize you with these types of, of income tax reductions.

Mike: What are some of the big [00:35:00] tax credits available to small businesses?

Janel Weinke: Yeah, so I think one of the biggest ones specifically that happened with COVID, um, the pandemic, one of the biggest credit I think that most small businesses are aware of, or even if you are a large business, is ERTC. And it probably gives you the feeling of, oh, I've heard enough of this. It's been, it's been that credit that I've heard a lot about, but ideally this credit that you could use is.

It's very specific for small business. It was to give the small business the opportunity to make sure that they were afloat to be able to still have a business during the pandemic. And then once the pandemic technically is over, um, that you can technically still be able to have those funds to be able to pay your employees, to be able to run your business.

And so, um, that is one of the credits that still exists that small businesses can use. Um, there is a [00:36:00] lot of discussion with bills being passed and, um, timeframes on when you can submit your 941X to correct and show those times where employees met the specific thresholds, um, in order to meet that.

specific wages and so forth, and how many employees you have. But I don't want to go too much into that information, but I think that credit still exists for small businesses, and you can't, and it's, it's as simple as submitting a 941X, like you said, and that 941X is going to reduce your, um, the liability in order for you to get a very large credit from the IRS.

Now the time is almost coming up for the IRS for you to submit that to the IRS, but there's specific tax periods coming from 2020 that you can still amend today.

Mike: Yeah, I mean, I'll just take a second and kind of recap because, uh, so it's the ERTC, [00:37:00] Employee Retention Tax Credit, tech credit that rewards small businesses for retaining employees. And this is a retroactive. So, uh, the way the law is written today, you have until April 15th to, uh, apply for tax credits going all the way back to 2020, the first year of the pandemic.

You have until April 15th of 2025 for 2021 retroactively. All that said, um, there are, there are qualification criteria. This isn't just a gift that everybody gets. Uh, I encourage you to hop on Asure's website, uh, fill out a form, talk to somebody who can take you through all the details to help you determine whether you do or don't qualify.

There's a bill. That passed the House of Representatives, uh, end of January. It's, uh, house Resolution HR 7 0 2 4. I, I know that because I Google it and look for status of it every day, but that Bill passed the House of Representatives that said the ERTC goes away on January 31st. That has not been even taken up by the Senate yet.

So at the time of this recording, the Senate has just come back into [00:38:00] session. Proponents want to, want to get this on the floor for a vote. Uh, opponents want to open up to amendments and who knows what the heck's going to happen if that happens. Well, here's what we do know. We know if nothing changes that this thing goes away April 15th.

So if you haven't investigated whether you're eligible, well, you should, because if nothing changes, you have a very short window of time left here. Uh, to apply for those credits. Worst case scenario is this, uh, this HR 7024. Uh, and it's got all kinds of other stuff in it, you know, child tax credits and real estate credits, all kinds of other stuff in it, um, is, is, you know, pretty, pretty common with big, uh, uh, federal government packages.

Um, so who knows what's going to happen. Worst case scenario, this is going to retro, retro, uh, uh, effectively end January 31st, but it's not going to cost anything. There's no penalty. There's nothing wrong with submitting your application. So if you, if you haven't done it, I would, I would just encourage everybody to the, the, the punchline is this.

It could [00:39:00] be, I think most people don't get qualified for quite this much, but it could be as much as 26, 000 per employee. So. It's potentially big money. Uh, find out if you qualify, if you haven't, uh, by all means, let us or somebody else that you trust, uh, get an application, but let's move on from ERTC. So, um, what, what are some of the other tax credits that employers need to know about?

And

Janel Weinke: many credits. I, I will tell you that, um, this is where I think the IRS also becomes your best friend, um, for providing you your expectations of what credits that small business owners can apply for. Um, And they actually release a very specific document on irs. gov that provides a list of all the credits that small business like so if you go to irs.

gov Oh yeah, so if you go to irs. gov and you literally just put in their search engine, um, small business credits, they are going to list out, [00:40:00] there's probably, you know, over 50 credits that, um, that could be based on specific requirements of your business, what type of employees you are, what kind of business you are, that you can apply for.

I would highly encourage that you use that as a resource, um, because Every year around the December time frame, they will provide you upcoming credits that you can apply for. And they only, not only do they provide you a list of that, but they provide you a link to where, how you can apply for them. So that is really important that you.

Mike: I think people would be amazed how readable the IRS website is. They really go out of their way to try to make this easy to understand and put out, here's all the tech credits available to you.

Janel Weinke: Yeah, I would put a reminder on your calendar if I'm a small business owner, and I want to make sure that I know exactly, what I can be able to provide to my business, [00:41:00] is to make sure to put a reminder on your calendar to state, I need to review IRS.Gov around the December timeframe to review exactly what credits I can apply for.

Cause there's so many and you could be a small business that has employees and this type of industry versus I have this many less employees or I have more, less than 50 employees. There's so many that you can apply for.

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