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36 PalletCentral • January-February 2017 palletcentral.com ccording to NFIB's Small Business Optimism Index in November, 58% of responders are planning to hire new employees. This positive hiring sentiment may increase in coming months if the economy heats up as many experts anticipate. In expanding your workforce, be sure to keep the following considerations in mind. 1. Growing Your Workforce Increases Federal Law Responsibilities As you expand your staff, you become subject to an increasing number of federal laws. For purposes of the Affordable Care Act (ACA), applicable large employers (ALEs) are required to provide affordable minimum essential health coverage or pay a penalty. ALEs are companies with 50 or more full-time and full-time equivalent (FTE) employees. The determination is based on the prior year's workforce. Thus, your 2016 workforce is used to determine whether you're an ALE in 2017. If you are currently below the ALE threshold, adding employees may be a tipping point. Proper counting for ALE status. Full-time employees are those who work 30 hours per workweek. FTEs are figured by adding their hours of service each month (but no more than 120 hours of service per employee) and then divide the total by 120. Add full-time employees with FTEs to see whether you're over the critical 50. Other federal laws. While some laws apply regardless of the number of workers you have, others (in addition to ACA) are triggered when you reach an employment level. Here are some federal laws and the employment level: • Americans with Disabilities Act: 15 employees or more • Age Discrimination in Employment Act: 20 or more employees • COBRA: 20 or more employees • Family and Medical Leave Act: 50 or more employees • Worker Adjustment and Retraining Notification Act: 100 or more employees. 2. Growing Your Workforce Grows the Amount of Payroll Taxes Obviously, adding any worker increases the amount of employment taxes. Your higher-tier employees are going to cost you more in employment taxes in 2017. While the tax rate for the Social Security portion of FICA remains unchanged at 6.2% for employers (as well as for employees), the wage base is $127,200 (up from $118,500 in 2016). This means $539.40 more per employee, so take this into account when adding a new employee to this tier. 3. Growing Your Workforce with Specific Workers May Save You Taxes Hiring new employees may entitle you to tax credits that reduce your tax bill dollar-for-dollar. For example, you can take a federal work opportunity credit for hiring someone in a targeted group set by law. The groups are: • Qualified recipient of Temporary Assistance for Needy Families • Qualified veteran • Qualified ex-felon • Designated community resident • Vocational rehabilitation referral • Summer youth employee • Supplemental Nutrition Assistance Program benefits recipient • SSI (Supplemental Security Income) recipient • Qualified long-term unemployment recipient. The basic credit amount is 40% of first-year wages up to $6,000, or $2,400. However, higher, and lower, amounts apply to certain groups. For example, the credit amount for the credit varies with certain targets (e.g., 40% of wages up to $24,000 for a veteran certified as being entitled to compensation for a service-connected disability). The federal empowerment zone employment tax credit for a business in a designated empowerment zone expired at the end of 2016. Whether this credit will be extended for 2017, remains to be seen. Some states offer their own tax credits for purposes of state income taxes. Find a list of state job creation tax credits from the National Conference of State Legislatures. 4. Look into PEOs and Other Staffing Alternatives Handing all of the responsibilities of an employer can be overwhelming, especially to firms that do not have their own human resources department. Employer responsibilities can be shared or shifted using various staffing options. PEOs. Professional employer organizations (PEOs) are co- employer arrangements in which these organizations handle the back office responsibilities, which include payroll, human resources, employee benefits, and regulatory compliance. You retain the right A FINANCE Expanding Your Workforce: 5 Tax Tips By Barbara Weltman