Often employers are faced with seasonality during their business and a perfect example is a retail operation selling during the Holiday season. Or, perhaps owning a restaurant near our coastal resort areas and the business is only open from May to September. Employers are very savvy these days in cutting expenses in order to maximize profits during their peak times. May we suggest a few ways to minimize your payroll tax expenses?
Most students are willing to learn your business and have strong communication skills to interact with your customers.
All Students, whether international or US based can be paid at a lower “training” rate depending upon annual sales and the state of employment (check your employment state for guidance).
All students in training and under age 20, can be paid a lower hourly rate of $4.25 for a period of 90 days. Your business must also have $500,000 or more in gross sales to be eligible to pay students at the subminimum wage and their work does not displace another worker. However, the subminimum hourly wage could be higher if your state’s minimum wage is greater than $7.25 per hour. If so, the student must be paid the more favorable rate. Please consult the Department of Labor at http://www.dol.gov/elaws/faq/esa/flsa/003.htm and your state’s wage and hour laws before electing payment of the training wage.
Consider hiring Exchange (J-1 Visa) students who can work for the entire season
Students on Visa sometimes have more flexibility in their schedules meaning longer breaks or different student requirements that may allow them to visit and work in the US. If you hire an exchange student your business will not be required to pay Federal and in some cases, State Unemployment taxes on their earnings. In addition, there are no Social Security or Medicare taxes being withheld from the student and of course, no requirement for the employer to match those taxes. This can mean a savings of several hundred dollars to the bottom line per student hire.