Through many of my conversations with CFOs, controllers and owners of mid-market and smaller companies, I’ve noticed a running theme that more emphasis should be placed on the tremendous opportunities afforded by the Hiring Incentives to Restore Employment (HIRE) Act (see this March 2010 MFA Perspectives for more detail on the HIRE Act). While most are vaguely aware that the Act was signed into law back in March of this year, there is less understanding of the tangible tax benefits this Act offers for private sector employers – for profit and nonprofit organizations – as well as state colleges and universities.

As companies once again look to expand their workforce, the HIRE Act tax incentives provide a boost of urgency for businesses to hire new workers. The payroll tax exemption puts money into a company’s cash flow immediately, since the tax is simply not collected in the first place. Also worth mentioning is that the threshold to qualify for the full new hire retention tax credit is relatively low – $16,129 in wages will be required to earn the full $1,000 credit ($16,129 x 6.2 percent = $1,000).

Below is an outline of the new hiring and retention incentives, including important qualification criteria and details on how to claim the tax benefits. Execution, or a company’s ability to quickly recruit and hire, will be key to taking maximum advantage of these incentives. Hiring qualifying workers sooner rather than later will draw the most out of the Act, as the tax credits diminish over time and disappear completely by January 1, 2011.

Details of the New Tax Benefits

Payroll Tax Exemption

Gives a qualified employer an exemption from paying the employer share of Social Security employment taxes (6.2 percent of the first $106,800 of wages) for wages paid in 2010. (more…)

One of the most significant tasks introduced in 2009 was presented by new guidelines under the Massachusetts Privacy Law, which requires a slew of changes to administrative and security processes.  Compliance calls for a significant overhaul for many companies, and the deadline is just around the corner: March 1, 2010.  The marketplace has demonstrated an urgent need for a new standard of  information protection, so we do not expect a great deal of leniency for those that fall behind.  Companies need to take the new law seriously, gear up, and put appropriate defenses in place around the personal information of their employees and customers.

This is without question a daunting call to action, however the need for the law remains unquestioned.  In fact, a report published by the Office of Consumer Affairs and Business Regulation [PDF] notes that since 2007, over 1 million Massachusetts residents have been impacted by security breaches.  The report states that 495 incidents were criminal in nature, while 312 “generally demonstrated poor employee handling of residents’ personal information, including transporting sensitive data, either in disregard of company policies, or in an environment without sufficient policies in place to secure such information.”

A few additional findings from the report include:

- The OCABR received 807 notifications of security breaches

- Most breaches (76 percent) were electronic in nature

- It may have been expected that financial services breaches impacted the highest number of individuals (707,305), but it is perhaps a bit surprising to find that the second greatest impact was felt from incidents involving the education sector (130,161)

The law takes aim at improving defenses against the criminal element while shoring up process to reduce risk of negligent handling of data.  And most importantly, it applies to — by the letter of the law — all persons that “own or license” personal information from a resident of the Commonwealth, specifically any individual or company that “Receives, stores, maintains, processes, or otherwise is permitted access to personal information through its provision of goods or services directly to a person that is subject to this regulation.”

That means pretty much everyone.

The most important step to compliance might be the WISP - a Written Information Security Program (WISP) that ensures the security and confidentiality of personal information in both physical and electronic format. The actual scope and complexity of a WISP will vary depending on an organization’s size and scope of business, availability of resources, nature and quantity of data stored, and the need for security and confidentiality of both consumer and employee information.

There is of course much more to understand before diving in. We encourage you to take a look at this 2009 Perspectives article for more detail, including specific action items and consequences for failing to comply.

I shared - and gained - valuable insight participating in a panel entitled “What keeps you up at night?  Solving strategic financing challenges for today’s lean manufacturers“ for the Greater Boston Manufacturing Partnership last week.  Our panel discussion was focused on partnerships, mergers and acquisitions, and joint ventures, and it was interesting to see the parallels between evolving strategies for growth and the manufacturing drive for continuous improvement.

From a manufacturing perspective, specific management and execution models like Lean and Six Sigma become critical to not just propping up a company, but providing a process that yields ongoing benefits and maximizes shareholder exit value. Proactive work on the accounting and financial controls side, meanwhile, calls for a similar commitment to process and can similarly add value to an organization’s exit price.

A couple of key themes that arose during the panel included the significance of having transparent and current financials, and the necessary attention required for to problem-solving that truly gets to the root of the issue (in particular, the need to ask “why?” five times).

I appreciate the opportunity from the GBMP and look forward to contributing more in the future!