For small business owners, it can be difficult to find good job candidates. Small businesses often times have to compete in the job market with large employers offering an attractive menu of fringe benefits. A possible solution for small businesses is finding workers who can be trained for the jobs they have.
Companies may want to engage interns through colleges or other programs. This gives employers the opportunity “test drive” a worker to see if he/she fits into the company culture and is trainable.
Be sure to note that internships aren’t free labor. Companies must pay at least minimum wage unless the internship program meet certain criteria outlined by the U.S. Department of Labor (DOL).
Apprenticeships used to be commonplace. They date back to the Middle Ages when they were used by tradespeople in the craft guilds to train the next generation. They are still used today in all types of industries. According to DOL, there are currently more than 150,000 employers employing more than 500,000 apprentices in over 1,000 occupations.
Apprenticeships provide paid on-the-job training (“earn and learn”) with related instruction designed to progressively increase workers’ skill levels and wages. According to DOL, registered apprenticeships (which are run through state agencies) allow “employers to develop and apply industry standards to training programs, thereby increasing productivity and the quality of the workforce.”
There may be federal income tax incentives hiring apprentices:
- Work opportunity credit: If the apprentice falls into one of various targeted groups (such as certain disabled veterans or ex-felons), an employer can claim a federal income tax credit related to the wages paid to the apprentice. The amount of the credit varies with the applicable targeted group. Find details in the instructions to Form 5884.
Find more information about apprenticeships through the DOL.
Training current employees
An employer doesn’t necessarily have to look beyond the company’s doorstep. The company can train employees for the tasks that need to be done.
Incentivize employees to learn: Some skills require higher education and employers can help them get it by paying some or all of the cost. This can be a tax-free fringe benefit to employees and no payroll taxes for you.
- If the education is job-related, there’s no cap on the tax-free amount. It is treated as a “working condition fringe benefit.”
- If the education is not job-related, you can pay up to $5,250 tax free under an education assistance plan
Small businesses can create the workforce they envision not only by hiring suitable employees. They can craft their workforce by appropriate training.
Barbara Weltman is an attorney, prolific author (with such titles as J.K. Lasser’s Small Business Taxes, J.K. Lasser’s Guide to Self-Employment and Smooth Failing) as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BarbaraWeltman.