The Works 2018 - Industry Track - Sponsor: Clarus Solutions
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Clarus Solutions helps staffing firms capture 4-5 times the amount of tax credits compared to other WOTC providers. Clarus Solutions achieves these types of results through the execution and management of our WOTC Optimization Programs. Not all WOTC programs are the same! Our WOTC Optimization Program can help your staffing firm improve cash flow up to 40%!
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The Works 2018 - Industry Track - Sponsor: Clarus Solutions
- 1. WOTC Optimization Programs Improve Cash Flow Up to 40% Presented by: Philip Wentworth
- 2. WOTC Optimization Experts Brent Johnson, CPA CEO – WOTC Expert 25+ Yrs Tax Accountant Deloitte Alumni Fortune 500 Philip Wentworth VP Sales & Business Dev 20+ Years in Technology 10+ Years in Staffing Ran $50M Staffing Firm Terracina Maxwell COO – WOTC Expert 18+ Yrs Tax Attorney E&Y Tax & Incentives Fortune 500 Blake Baumann VP Client Success 20+ Yrs Customer Success WOTC Staffing Expert 250,000+ New Starts
- 3. The WOTC Hero Story o “The WOTC Hero Story” o Converting CFO’s and Staffing Firm Owners into WOTC Heroes o InnoSource – Steve Smith, CFO o $160K to $950K o WOTC Optimization Best Practices o WOTC Eligible Labor Pool Management o 5XProfitable
- 5. What is WOTC? • Work Opportunity Tax Credit = “WOTC” • First enacted in 1996 to encourage employers to seek and hire those which have been considered disadvantaged through a small financial incentive, or tax credit. • WOTC is an extension of the “Targeted Jobs Tax Credit” from 1978 • Federal tax credit program available to employers of all sizes – to any business that pays Federal taxes. • Electronic Screening changed the program’s effectiveness in 2012. • Recently extended through 2019.
- 6. What is WOTC? Clarus Solutions CONFIDENTIAL 2018
- 7. WOTC + Staffing = Perfect Fit
- 8. WOTC + Staffing o High WOTC-Eligibility within Staffing Industry o Average Tax Credit is approximately $2,100 o Perfect fit for Staffing: • Over 18 Million Americans will find employment through staffing firms in 2018 (ASA projection) • 35 million Americans could potentially qualify for WOTC Program in 2018 • Many businesses under $250M in revenue do not currently leverage WOTC
- 9. WOTC + Staffing o Leverage tax incentives against shrinking margins: o Identify Additional Employee Pools o Eliminate the Cost of On-boarding with WOTC (ex: Background Checks; Drug Screens) o Reduce the Cost of Recruitment with WOTC (ex: Job Board Postings; SaaS providers) o Improve Employee Retention Rates (New Entrants to New Industry = Loyalty) o Can improve cash flow up to 40% • Per Employee (Individual Transaction) Profitability is impacted by 40%-50% • Next Slide: WOTC Economic Impact on Per-Employee Profitability
- 10. 5X Profitable Tax credit eligible employees generate 4-5X times as much after tax cash flow as employees from the general labor pool. Identifying and then tracking these “gold nuggets” to ensure that as many as possible are certified and work at least 400 hours optimizes WOTC program results.
- 11. Who is ready to become a WOTC Hero?
- 12. WOTC Optimization Best Practices
- 13. Mechanical vs. Operationalized Mechanical Providers Clarus Solutions One of Many Solutions WOTC Focused, Maximization Experts Pre-Determined Implementation Flexibility (Applicant/Onboard/Tablets/Other) “Get what you get” / “Cruise Control” WOTC-Eligible Database of Applicants www.WOTC4Veterans.com No Operational Communication Ongoing Communication Call Center Rep Dedicated Tax Credit Consultant Above Market Fees Cost Effective Fee Structure Dysfunctional Reporting Easy to Understand, Proactive Reporting Limited Clarity / Understanding Education-Based WOTC Programs EX: WOTC Optimization Clinics Antiquated WOTC Management Quadrant WOTC Labor Management System
Editor's Notes
- WOTC was enacted in 1996 as a financial incentive for employers to look at and hire from historically disadvantaged employee pools whether you were physically disadvantaged, financially disadvantaged or mentally disadvantaged It is a federal program that is available to all carriers and if you are paying federal taxes you are eligible to participate. As the program was enacted by congress and is managed by the IRS it is executed and administered at the state levels through state workforce agencies and that is where everything is certified and we are able to capture tax credits As I mentioned in the beginning that the WOTC world changed in 2012 when the IRS began allowing electronic screening which opened the door to bring more efficiencies to the program And congress in 2014 extended the program through 2019 and some folks that we are talking to in Washington believe that after 2019 it will actually be a permanent fixture in the IRS tax provisions, but for now we know we will be working with you for at least the next 3 years.
- WOTC was enacted in 1996 as a financial incentive for employers to look at and hire from historically disadvantaged employee pools whether you were physically disadvantaged, financially disadvantaged or mentally disadvantaged It is a federal program that is available to all carriers and if you are paying federal taxes you are eligible to participate. As the program was enacted by congress and is managed by the IRS it is executed and administered at the state levels through state workforce agencies and that is where everything is certified and we are able to capture tax credits As I mentioned in the beginning that the WOTC world changed in 2012 when the IRS began allowing electronic screening which opened the door to bring more efficiencies to the program And congress in 2014 extended the program through 2019 and some folks that we are talking to in Washington believe that after 2019 it will actually be a permanent fixture in the IRS tax provisions, but for now we know we will be working with you for at least the next 3 years.
- To give you an idea of the 9 target groups out there that associated with the tax credits. You probably are familiar with some of these categories and you are already sourcing from these pools so why not screen and get these folks certified so you can capture those tax credits. These are the people congress wants you to hire – but also need to put them to work. How credit is calculated …
- So with that being said 15% of the new hires made in transportation qualify and the average tax credit is $2150 And think about this, there were 2.1 million new hires made last year and I know there is a big push by the industry to get veterans into trucking Now we believe WOTC can be used first and foremost to reduce your federal income tax liability where it then can combat shrinking margins and improve your OR There have been some very interesting by products of this: Companies are using it to identify additional new employee pools that might not have been considered in the past Can offset the cost of on boarding new drivers and I believe I recently saw the average onboarding of new driver is around $1000 and in this case the average credit is $2150 We have seen it reduce the cost of recruitment and we have also seen it improve driver retention rates…I love to tell the story of being at one of the motor carriers that hire ex-felons and he getting through their orientation and getting his truck and to see his reaction that his family had and his whole posture change and no one else was really looking at him for a potential employee he became very loyal to that motor carrier.
- So with that being said 15% of the new hires made in transportation qualify and the average tax credit is $2150 And think about this, there were 2.1 million new hires made last year and I know there is a big push by the industry to get veterans into trucking Now we believe WOTC can be used first and foremost to reduce your federal income tax liability where it then can combat shrinking margins and improve your OR There have been some very interesting by products of this: Companies are using it to identify additional new employee pools that might not have been considered in the past Can offset the cost of on boarding new drivers and I believe I recently saw the average onboarding of new driver is around $1000 and in this case the average credit is $2150 We have seen it reduce the cost of recruitment and we have also seen it improve driver retention rates…I love to tell the story of being at one of the motor carriers that hire ex-felons and he getting through their orientation and getting his truck and to see his reaction that his family had and his whole posture change and no one else was really looking at him for a potential employee he became very loyal to that motor carrier.
- So a quick case study is one of our larger clients in Ohio, you can see the first column of numbers just shows if they didn’t have WOTC credits what their after tax income would be. The second column is they actually went first with one of the well known name brands WOTC providers that does the mechanical approach and after 12 months had $21K in tax credits through their process Well when we got a hold of them, the federal government was allowing a “Look Back Review” which ended this month that allows you to go back to 2015 and claim any people you missed so through our process we were able to capture $415K extra dollars in tax credits and they are on pace to do in the neighborhood of $600K this year. You can see the difference in the After Tax Income…now which one would you want to be?
- WOTC was enacted in 1996 as a financial incentive for employers to look at and hire from historically disadvantaged employee pools whether you were physically disadvantaged, financially disadvantaged or mentally disadvantaged It is a federal program that is available to all carriers and if you are paying federal taxes you are eligible to participate. As the program was enacted by congress and is managed by the IRS it is executed and administered at the state levels through state workforce agencies and that is where everything is certified and we are able to capture tax credits As I mentioned in the beginning that the WOTC world changed in 2012 when the IRS began allowing electronic screening which opened the door to bring more efficiencies to the program And congress in 2014 extended the program through 2019 and some folks that we are talking to in Washington believe that after 2019 it will actually be a permanent fixture in the IRS tax provisions, but for now we know we will be working with you for at least the next 3 years.
- So when it comes down between thoughtful and some of the other WOTC providers we are flexible with our integrations with 3rd party like a Tenstreet, PMG, and McCleod We also don’t just flip a switch like the mechanical providers although we can, but we want to sit with you and do an assessment to set expectations on antipated results so that you have something to measure us by We will proactively send you monthly reports that will show our results and the tax credits we are obtaining for you so you know that we are meeting the expectations established Then we go a step further and assign to you a dedicated tax credit consultant to your account that will be able to help answer any questions you have along with going over the reports with you and share best practices. If you were to poll our clients they would right away talk to you about the service level that Terracina and her team provides and that we are high on accountability So if we are not hitting the expected tax credits we are sharing with you what is happening and what we are doing to refine our approach vs the mechanical providers who basically have the mentality that you get what you get. So if you were really wanting to nail down the 3 things that separate us: 1) is the tight driver application integration with your on-boarding platform 2) the consultative approach of setting expectations, measuring results, and proactively refining our approach until we are maximizing the amount of tax credits your receiving 3) communication from initial consultative assessment to reporting to having that dedicated tax credit consultant.