In New Jersey the jobless rate is the highest it has been in 35 years. To combat stubbornly high unemployment, politicians throughout the country have continually stressed the importance of small companies as key drivers in turning that figure around. New Jersey Senate President Steve Sweeney recently went one step beyond mere oratory.
The senator proposed a new tax credit for small businesses, including closely held businesses that hire unemployed workers. According to the proposal, businesses would receive a reimbursement credit for all state and federal taxes it paid on new employees who previously did not have a job for at least a month. In all, the reimbursement would likely save small businesses around $3,000 per year for each unemployed person they hired.
While the credit would reduce tax revenues collected, the senator predicted that the proposal would be revenue neutral. That is because although the measure would reduce tax revenue collected, it would also get people off the unemployment benefit rolls.
Thus far, the proposal has not been introduced, but the senator hoped to have it passed sometime this year. If that happens, small businesses -- defined as companies with less than 100 employees -- would be able to start taking advantage of the credit during the 2013 tax year.
The proposal is expected to be just the first in several measures to help fight unemployment.
For New Jersey small businesses looking to expand, the measure may be welcome news. At the same time, expansion brings its own headaches -- office space, employment contracts and tax implications, for example. To weather its growing business and legal needs, small businesses may be need to seek outside help on issues like general counsel functions, commercial real estate transactions, business purchases and sales among others.
Source: NorthJersey.com, " N.J. tax credits pushed for small businesses," Michael Linhorst, Sept. 12, 2012