Small businesses may be able to take advantage of a tax incentive if they hire new workers who have been unemployed over the previous weeks. The tax credit exempts employers from their portion of Social Security taxes on new workers and may also qualify an employer for a tax credit of up to a $1000 if they keep this previously unemployed worker hired for over a year.
Unemployment has become a problem that has reached epidemic proportions and there are few who believe that it will be easily overcome. There have been small business initiatives, tax credits, funding, and other various proposals that are hoped to create an environment where small businesses can begin hiring again, which will give consumers more money to spend so that the economy can prosper once again.
However, many companies are simply hesitant to hire because of the uncertainty of the economy and worry that adding new workers may put a strain on their finances. The problem is that while unemployed men and women are seeking jobs they are not spending money, since they have little or no income. Yet, businesses do not want to hire until spending increases, which will take longer if unemployment stays high.
This cyclical problem is hoped to be combated through initiatives like tax credits on hiring and there are proposals for extensions on the small business tax initiatives and on things like small business loans. Certain companies have asked that funds be made accessible to small businesses but many lenders are hesitant to make small business loans since the fear that most companies may default is at the forefront of many small business lenders’s concerns.
Yet, legislation that has been proposed and will be evaluated when Congress returns to session may provide an environment where companies who are seeking small business loans can gain the funds they need, while companies who are hesitant to acquire debt may still be able to benefit if they hire new workers through extensions in the tax incentive program.