The Work Opportunity Tax Credit (WOTC)
Your business can qualify for tax credits when you hire certain workers. The Work Opportunity Tax Credit is a federal tax credit that encourages employers to hire targeted groups of job seekers by reducing your federal income taxes.
To participate, employers must complete IRS Form 8850 and ETA Form 9061 or 9062. To get these forms and more information, visit the IRS website or call (800) 829-1040 or the FAX-ON-DEMAND number at (877) 828-2050.
Certain taxes must be withheld from employee wages and remitted to the appropriate agency. These include state and federal income taxes and FICA (Social Security).
The State of North Carolina requires that every new employer register with the North Carolina Department of Revenue for a withholding identification number. To register, complete an Application for Withholding Identification Number (Form NC-BR) online, or by contacting:
North Carolina Department of Revenue
PO Box 25000
Raleigh, NC 27640
Employer Identification Number (EIN) and Federal Taxes
The federal government also requires that every employer who pays wages to one or more employees file an application for an employer identification number (often referred to as a Tax ID Number) with the Internal Revenue Service.
You can register for an Employer Identification Number or EIN with the federal government online by completing an Application for Employer Identification Number (Form SS-4). Or to apply by phone, call the IRS Business & Specialty Tax Line at (800) 829-4933.
Also, for more information read Understanding Your EIN (Publication 1635).
Regarding federal taxes, as a public service the Internal Revenue Service will assemble and send you a tax information kit that fits your particular business situation. The kit includes forms and publications that apply to federal taxes only. To obtain this information contact the IRS at (800) 829-3676, or visit their website and download:
A Small Business Resource Guide CD (Publication 3207);
Tax Guide for Small Business (Publication 334); and
Employer's Tax Guide (Publication 15).
Unemployment Insurance Tax
Generally, a sole proprietorship, partnership, or corporation is required to provide unemployment insurance coverage for its employees if the business has one or more employees for 20 or more weeks in a calendar year; or pays $1,500 in wages during a calendar quarter.
You may also be liable for unemployment insurance tax if you acquire all or part of a business already subject to the Unemployment Insurance Act. Employer contributions to the Unemployment Insurance Fund are paid to and administered by the N.C. Division of Employment Security. To determine the extent of your obligation, contact:
700 Wade Ave.
Raleigh, NC 27605