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Tax Info Every Employer Should Know With Stephanie Cornejo
11 Plays26 days ago
Many businesses leave money on the table, and Stephanie Cornejo and her colleagues at Corporate Tax Incentives know this all too well. This is also the case when examining the Human Resources department. HR doesn’t need to be the cost center most business leaders see it to be – once tax credits come into play.
About Stephanie:
Stephanie Cornejo is a talented, ambitious leader who heads CTI’s Credits & Incentives practice. With oversight of operations and practice development, Stephanie monitors the tax incentive landscape to identify federal, state, and local tax credits that CTI can capture, maximizing value that clients can use to power success.
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Transcript
00:00:07
Speaker
Hey everyone, welcome back to our fireside chat series, Mustard Hub Voices Behind the Build, where we talk with the people building, backing, and running better workplaces.
00:00:18
Speaker
I'm your host, Curtis Forbes. My guest today is Stephanie Cornejo. Stephanie is a talented, ambitious leader who heads CTIs, credits, and incentives practice.
00:00:30
Speaker
With oversight of operations and practice development, Stephanie monitors ah the tax incentive landscape to identify federal, state, and local tax credits that CTI can capture, maximizing value that clients can use to power success.
00:00:47
Speaker
And I'm so excited to have her on today's episode. Welcome to Behind the Build, Stephanie. Yeah, thank you, Curtis. Really great to be here today. So before we dive into CTI, corporate tax incentives, when you're not taxing, what do you like to do?
00:01:08
Speaker
Well, I love to cook. um I come from a line of some really, really great cooks, my aunt's a chef. um So I really love to cook. I love to host. um If you talk to any of my friends or family, my house is the hosting house um where we gather and, you know, for football games, playoff games, just to do it, just girlfriends coming over.
00:01:31
Speaker
So I love to cook. Okay. Had to make sure that there was something behind tax incentives, you know, yeah really that really that really got you going. and oh You had a really solid career with corporate tax incentives and yeah it looks like you've had, um you know,
00:01:49
Speaker
you've You've done some incredible things there. What got you into the world of finance and taxes? I think that's a really um great place to start because you know you don't go to school thinking, I'm going to go to school and do tax credits. you know I don't think anybody in this industry goes to school wanting to do tax credits.
00:02:10
Speaker
Yeah. So um i started in finance and working for ah ah different colleges, like helping in their grant writing department and assisting you know with grants and things of that nature. So i was really familiar with how like federal funding worked um from a scale of like, you know, organizations like colleges or even um from the student level side of helping students, you know, complete different you know FAFSA forms, helping them you know fund their education.
00:02:40
Speaker
um And then from there, I saw an opening over at CTI and this was 14 years ago. i've been with my firm for 14 years now. So quite some time I've had a long career there. Clearly they're doing something right. i mean, that's yeah it's a nice tenure. but Yeah. um So I started, you know, you know, with CTI 2010.
00:03:03
Speaker
And from there, you know, I always talk about the firm back in those days because we were such like kind of startup. You know, we were very small. We're here. We're located in Sacramento, California, headquartered out of Sacramento, California, now currently Folsom.
00:03:18
Speaker
um But, you know, i feel like when I talk about our firm back in those times, i'm I'm like those old people are like, when I was your age, I used to walk in the snow with no shoes. Like it really did feel like that because we were so new business.
00:03:32
Speaker
the world of credits and incentives, although these credits and incentives have been around for you know years and years, 30 plus years and so forth. um But to really expand my knowledge into the federal, state and local level credits that were available that businesses can take advantage of.
00:03:47
Speaker
um And so from there, I grew my career. We grew our practice. We're now 180 individuals strong. um When I started, there was like seven of us. So it's really great to see our company be where it's at today to where we were back then.
00:04:04
Speaker
What I do miss is the ability to, you know, back then you got to have one-on-one time with the owners. You know, there are founding principals, both CPAs, um both former auditors with the state of California. And, you know, we're, we're a lot bigger now. So while I still get that one-on-one time, it's a little bit different if you know what I mean.
00:04:23
Speaker
I do. And you know what I, One of the reasons that I'm really excited for the next half hour here, you've been through that transition from a really, really small, you know, like you said, startup-y, seven people you know, now 20 that size. Yeah.
00:04:40
Speaker
now twenty times that size yeah And have probably seen and experienced a lot of, you know, growing pains that organizations feel when they grow. a lot of the people problems that we see every organization suffer from. And so, you know, you have... um I think really valuable insight at at every one of those stages, you know, some things that have worked probably know a few things that maybe didn't work so so well also. But before we dive into that, tell me about CTI. What is corporate tax incentives?
00:05:18
Speaker
What do you do? How do you explain it? to Yeah. So, um you know, my family still thinks I do personal tax returns, you know, I get it. But I do not do personal tax returns. So,
00:05:29
Speaker
ah CTI is a tax consulting firm. So we strictly work in a very niche area of the tax code, and it pertains to credits and incentives.
00:05:41
Speaker
um I'll summarize it by saying we have three main service lines that we provide to our clients. um The first is employment incentives, which our employment incentives practice is the practice that I oversee.
00:05:54
Speaker
It houses a very robust amount of credits and incentives that kind of fall underneath that umbrella. The best way I'd like to describe employment incentives is think of business activities that have to do with hiring, training, and retaining.
00:06:08
Speaker
Likely there is credit that exists or an incentive that exists at the federal, state level, a deduction, refund just for those activities alone.
00:06:20
Speaker
um The second largest piece of our practice is our research and development tax credit practice. So if companies are developing a product, a process or improving that product or process, um you know, they can potentially receive a federal or state tax credit.
00:06:37
Speaker
So this is reducing tax liability, dollar for dollar reduction in federal or state tax liability that a company will pay, a taxpayer will pay. And then lastly, We have our property incentives practice, which houses a couple of different programs, cost segregation. So if you're looking to accelerate depreciation schedule, a cost segregation study can be done on real estate. We have our 45L, our 179D deduction energy incentives all falls underneath our property incentives.
00:07:09
Speaker
So CTI is a holistic firm. We look at all business activities that a company is doing and determine what credits and incentives exist for those types of activities. That's the best way I can summarize what we do. I mean, that's a pretty good that's a pretty good overview. And so specifically working with employers, not individuals.
00:07:27
Speaker
Correct. Right. So, you know, talking about these, you know, employment incentives, how did you so How did you get to your current role as managing director at CTI? I mean, you started as an account manager.
00:07:44
Speaker
I did. Yeah, I started as an account manager where I was actually you know doing the day-to-day grind, working with our clients one-on-one, running their credit calculations, you know providing all of the substantiation behind the credits that we were calculating for them.
00:08:00
Speaker
um And I think that really gave me a good, solid foundation to the operational side of our business. um From there, I got promoted to a senior manager. So you're just like a level up and you have a smaller team that you're managing under you that's responsible for a certain goal and quota of, ah you know, delivery of projects.
00:08:19
Speaker
While we don't do tax credits, I mean, while we don't do tax returns, our season very much aligns with the tax season because we've got to get these, you know, credits.
00:08:29
Speaker
you know, reports out to our clients in time for them to, you know, list in their tax returns. So we have busy seasons that align very much similarly with, you know, the tax season, um tax filing seasons, I'll say.
00:08:42
Speaker
So, um you know, from there, we had very specific quotas and and and initiatives we had to get done. And I oversaw a very small team. um And I lived in that role probably for about a good, you know, five years, I'd say.
00:08:56
Speaker
um where I just had the larger accounts, you know, more, you know, prominent accounts would would be with me, um our larger accounts, I would manage. um And from there, um they saw my ability to really, I think, lead, you know, a group and, you know, we were able to create certain processes, because I live in process, I can't, you know, work inside of just, you know, willy nilly processes, I have to have a very structured process in order to thrive.
00:09:23
Speaker
So I created very structured processes for myself and for my team. um I think the owners saw that and were were like, hey, you know what? You need to probably lead this department. We never had a leader. We just reported directly to the principals because we were smaller back then.
00:09:38
Speaker
um And so as we began to grow the practice, um We brought in you know more employees at one point. I had 50 employees under me. So um it was a very robust, like thriving practices.
00:09:52
Speaker
with With credits and incentives, programs come and go. So there was a very lucrative program that had come along during COVID time. um So we had to you know beef up our technology. And we're always evolving with technology as well, especially within these programs. It's necessary. Yeah.
00:10:06
Speaker
um So there's that component, too, is ensuring that not only are you know we staying up with times in terms of reviewing the different, I'd say, um you know legislation when it comes out, you know the programs are changing or evolving, making sure that we're in line with those guidance from either the IRS or state legislation.
00:10:25
Speaker
um ensuring that our technology is up to par and that I have a really great team um you know that that can you know actually deliver on what we're doing here at CTI and have the core values of our firm.
00:10:37
Speaker
And so um it it's been a long, you know a lot of blood, sweat and tears, but we've gotten to a point now where I have a really, really amazing team. We've got a lot of longevity on the employment incentive side. I have a director who's been there longer than me, ah one year longer. I've got Our project managers are tenured. They've got like 10 plus years under their belt with the firm. So um it's really a great company to work for. And I think it speaks to who we are as a firm.
00:11:07
Speaker
um Because when you think about the owners, you know, they they have their auditor hats, you know, their CPA hats, and they're really concerned just about getting out good work. You know, that is at the core of who they are. They want, you know, good quality work going out to our clients.
00:11:22
Speaker
um And I think for us, for CTI, that really speaks to who we are as a firm and the level of service that we're giving to our clients and the substantiation that we put into, you know, these studies that we're delivering to our clients.
00:11:35
Speaker
It's really like nothing that I've seen, um you know, in the industry. We're also privately owned. And that's really not seen in this industry anymore. They're usually getting you know gobbled up by you know big box vendors and you just lose the personal touch. You lose all of that.
00:11:50
Speaker
um And so to still be a part of this all these years and the growth, I feel very proud of it. It's like you know my little baby that's like grown and like here we are thriving in this space. You know, it's, it's, well, it is pretty remarkable. I mean, being privately owned, having, you know, so many people with such a long tenure stay there, um you know, clearly there's things, I think the DNA of the organization, right. That really, you know, I think that um that you resonate with and it sounds like everybody else on your team.
00:12:20
Speaker
um So, so going from account manager, um you know, to managing director, you've, you know, you've seen, Most everything, right? you've you' You've been able to work with so many different kinds of clients.
00:12:34
Speaker
Tell me the kind of clients that you generally work with, the CTI generally works with, and what kind of problems are you guys obsessed for solving for them? Yeah. I'm to speak specifically to the employment incentive side of the practice because that's what oversee. And I think um part of what we're seeing and what we can all feel and see is the rising costs, right? Mm-hmm.
00:12:58
Speaker
um But that affects every aspect of business, not just us as personal individuals who are at home and dealing with rising costs of groceries, but the rising costs of like recruitment and onboarding. And what does that do to a company?
00:13:11
Speaker
um You know, looking at these tax credits and how they can help offset, you know, this this rising cost that's occurring. And you'd be surprised how many companies don't know that these programs exist.
00:13:22
Speaker
Oh, so I imagine. Yeah. One program in particular, um the Work Opportunity Tax Credit, it's also referred to as WOTC. um You know, folks out there might have heard of it.
00:13:35
Speaker
But it incentivizes business owners for hiring individuals who have certain backgrounds prior to being hired. It is a hiring incentive. So literally companies are being compensated in the form of a credit, a dollar for dollar reduction in tax liability just for doing something they do every day, which is hire individuals, train them, put them into the workforce.
00:13:56
Speaker
um This is a federal income tax credit. So it is reducing tax liability at the federal income tax level, dollar for dollar. If we generate $20,000 in tax credit, you're offsetting your $20,000 of tax liability. That gets wiped out.
00:14:09
Speaker
So yeah, not to bore everybody with tax credits, but they're very passionate about it. do you Do you see a lot of these things change from administration to administration? Do they stay consistent? And if they do change,
00:14:25
Speaker
How? What part of the changes? I think that's a great question, given the moment that we're all in right now, right? With, you know, um President Trump, you know, his big, beautiful tax bill and what's included in that.
00:14:38
Speaker
So um for this particular program that I was referencing, the Work Opportunity Tax Credit, it's not a permanent tax credit program. However, it has been in existence for 30 plus years now in some form or fashion. Right.
00:14:51
Speaker
um It usually is extended in the form of a tax extender bill that ah the sitting president will extend. Coincidentally enough, when President Trump was in office, he extended this for a five year term, the WOTC program for a five year term.
00:15:06
Speaker
The last time he was in office, there are tax extender bills in place to extend the program for another five years because it's currently due for um um it it has an expiration date at the end of this year of twenty twenty five.
00:15:19
Speaker
um we don't foresee the program going away. it has been in existence for 30 plus years now. it For what it does for companies, for the economy, um you know, it's favored on both sides of the aisle. It also helps with diversity in the workplace. It just, it's a, it does a lot of good. The program does.
00:15:37
Speaker
um So my answer to that is sure programs come and go and administrations do have that power to eliminate them or not, you know, continue to push forward with with those two different initiatives.
00:15:51
Speaker
But um for WOTC, there is a bill in place circulating to extend it. And there's also one to make it permanent. So we don't know what's going to happen, given the, you know, status on the Hill, what's happening there.
00:16:04
Speaker
I don't foresee it going away. do Do you feel like there is... So you mentioned that some programs there are some programs that do come and go. ah There might be changes that happen as administrations change. And I'm kind of curious, like how to does that impact your business? Is there a constant need for re-education of you and your and your own colleagues and then also you know the the clients that you work with? I mean, is that...
00:16:32
Speaker
is that cause for, is that ever cause for concern? Is there a constant re-education that's happening having to happen? Oh, for sure. There's definitely that aspect to this to this industry and this, you know, at my firm, you know, um when I mentioned that programs come and go, there was a very lucrative program um during, you know, the COVID times. And um You know, to be able to learn that program, all of its requirements and the guidance was constantly being updated by the IRS.
00:17:04
Speaker
um You know, you do this long enough and, you know, all of these programs are in in a sense, some form of a you follow a set of rules, you do X, Y, z you get the credit. As long as you can understand how credit programs work and understand the detail and the nuances of it, um it's not necessarily difficult to do the work.
00:17:23
Speaker
What's difficult? is ensuring that your people are trained up to be able to do this work accurately and get out, you know, quality work, you know, accurate, you know, report numbers. um And also the technology is up to speed to what we need for these particular programs.
00:17:38
Speaker
I think that's one of the big differentiators with my firm is we have a, ah you know, our technology department is 24 seven, you know, that's all they're constantly updating. We're going through a big update right now on our platform.
00:17:50
Speaker
um You know, our people are constantly being trained on the different state level incentives that are there because we can layer on different incentives depending on the states that they're located in. um So there's constant training and, you know, that's happening, which I find to be more exciting in ah in a job. It's not just monotonous. You know, there's always something new to be learned.
00:18:10
Speaker
i think that that kind of keeps things moving forward. um And exciting. just to Just to pivot a bit, you know, as As you know, here at Mustard Hub are all about people, right?
00:18:24
Speaker
and And you work with clients. well um What are some really common ah HR issues that you might see, or what we like to call people problems, and I referred to them you know a lot earlier, that you see with with businesses today?
00:18:41
Speaker
um Probably not CTI. It sounds like there really aren't too many issues going on within your organization, but from what your clients, what do you generally see? Yeah, I mean, you know, I kind of touched on for the particular practice that I oversee, which is employment based incentives. We work very closely with HR departments.
00:19:00
Speaker
okay So and and in, you know, our clients that we have, particularly with our HR teams, you know, they always have to do more with less. They're usually, you know, overworked. You know, they don't have enough hours in the day.
00:19:15
Speaker
um They're the cost center for the company, you know, because they're not generating some form of a revenue. So these these particular hiring incentive programs make ah HR teams look like winners, right? They come in as the revenue generating departments now because they're hiring incentives. So they're paired right into usually HR's department.
00:19:34
Speaker
um You know, some of these credits, Curtis, can be significant in the amount of of dollars that are saved. So, you know, we have, you know, very specific industries align best with with this particular program. So when I'm talking to different companies and their HR teams in the restaurant in hospitality, you know, world um retail, you know, staffing, um manufacturing, i you know, really any type of industry that's having, you know, more of a high turnover, blue collared type workforce.
00:20:08
Speaker
where the likelihood of these individuals to fall into this target group are going to align very well with these particular industries, typically high turnover industries because it's a hiring incentive. And you know every single time we enter into these relationships and partnerships with our clients, the main thing we hear from HR is, I can't put anything else on my plate.
00:20:27
Speaker
Like I don't have room for anything else. If this is going to cause me to have extra you know work, I can't, we can't do it. yeah That's when automation comes in. you you brought up a really, really important point, and how HR is often seen as cost center.
00:20:44
Speaker
And the fact of the matter is, you're right, they are. they are But if they can come to the table with things like this, it's really putting money back on the table.
00:20:56
Speaker
Exactly. you know Which is, I think, would make any HR leader you know um excited, i think, want to jump at that that opportunity. um you know So I could see that as being such ah an incredible benefit. Yeah.
00:21:12
Speaker
So I mean, when you have an HR department that comes to ownership and says, listen, we have this credit that we can go after for just hiring people that can generate anywhere, you know, in some cases, Curtis, you know, depending on the hiring volume, it can be six figures of of tax credits that can offset tax liability um dollar for dollar reduction.
00:21:32
Speaker
I mean, it becomes a very powerful tool for HR um to bring to the table. And so that's why mostly in this particular credit and incentive, We work very closely with HR, so we hear all the stories.
00:21:44
Speaker
Tell me about some of the industries that you find might have some of the highest turnover, um but also some of the biggest opportunity here with yeah Texas Innocence.
00:21:59
Speaker
I'll focus on let's say, I'll pick one, but there there's several different, I mean, there's there's a couple different industries. Okay. But for restaurants, in particular, QSRs, quick serve restaurants, casual dining, fine dining, That is a brutal industry.
00:22:16
Speaker
um the The cost to onboard an employee, to retain an employee is incredibly expensive. And those employees are turning over faster than, you know, sometimes, you know, within a three week period, maybe they don't need Roughly 130% annually, I feel like.
00:22:32
Speaker
Astronomical. Yes. it's usually like 150% turnover rate in that industry. um And so at the end of the day, the bottom line matters in in that industry. And so when you can bring in tax credits to offset that turnover cost, right, of just the constant turnover and retraining and training of new employees,
00:22:50
Speaker
um that it can be quite lucrative um for that industry. I would also say um like healthcare, specifically, we've seen a very big uptick in healthcare. care And I will say specifically assisted living, memory care, um you know home healthcare. care And I don't know if it's because you know the boomers are entering into homes now,
00:23:13
Speaker
that there's been a ah big uptick in this particular industry. But I will say this industry has the highest qualifying percentage out of all industries for the WOTC program. 45% of their new hire population qualifies for the program. would imagine a lot of those business leaders have absolutely no idea.
00:23:32
Speaker
None. Yeah. It is one of the most, i mean, it's one of the most rapidly growing industries. I know it's definitely at the top, ah you know, in the in the franchise space. Yes. um but But that's actually a really interesting statistic about how many probably qualify. And, and yeah you know, I'd be curious how many are actually um aware of that.
00:23:53
Speaker
I have a question about, I'm going have to go into super big detail about this, but how is it calculated? In other words, are business leaders able to, for example, is there a bigger credit? Do they wind up having a better deduction for retaining people?
00:24:13
Speaker
Is it one-to-one? Does it matter? yeah Really good question. yeah. The way that the individual, the the company is able to achieve receiving these credits is a, they have to hire an individual who has this certain background, right? And these backgrounds can range anywhere from military and veteran statuses. Five of the 14 target groups, there's 14 target groups is what they refer to.
00:24:35
Speaker
Five of them are related to military and veteran statuses. The remaining are really focused and centered around public assistance type programs geographically where they live potentially can generate a tax benefit.
00:24:47
Speaker
um And the credits can range anywhere from twelve hundred up to ninety six hundred for each individual new hire, depending on the target group they they they qualify under. Now, the way that the credit is calculated is it's based on a percentage of the hours and wages that the new hire worked in their first year of employment.
00:25:05
Speaker
So have one full year to consider that individual's wages. it's It's capped. So um capped at $6,000 in wages. So the way that it's calculated is the hours are considered. There's a minimum threshold for um individual's who are certified for the program to begin to to calculate credit, they have to at least work 120 hours um in order for the company to start to receive some of that benefit, like 25% of that credit, um if they at least work 120 hours. So they can't turn over you know before then.
00:25:36
Speaker
okay Let's say a full-timer working 35 hours or more, they'll hit that in three weeks. So for a full-timer. um To hit their max value of credit, it's 400 hours, which is about three and a half months for an individual.
00:25:52
Speaker
So after that first year, is a company still able to earn tax incentive? That's it. That first year of employment, we're able to calculate. That's why it's a hiring incentive. So that you know this year they're hiring, they have individuals that are qualifying and certifying. Next year, they'll continue to hire and those new hires will continue to qualify and certify under the program. So it's applicable only in that first year of hire to that first you know onboarded employee.
00:26:19
Speaker
And working with organizations, obviously, who are you know who who have high you know turnover, you know who are experiencing some of those issues, do you ever get insight in some some of the people problems that may that they may be having that's contribut is contributing to some of that high turnover?
00:26:38
Speaker
um i think certain industries, and not necessarily into the weeds of these particular industries, but I think certain industries tend to have um higher expense costs for employees, maybe are prone to more um on the job type of accidents. Think of like construction or like industrial manufacturing um that can attribute to those costs.
00:27:00
Speaker
But I don't necessarily hear other than the fact that they're profitable, they don't want to pay tax. And how can we offset this tax liability? Because you know, we're paying X amount in tax and we want to offset it all together. And they definitely align with an industry that would, you know, could benefit greatly from the program.
00:27:19
Speaker
um Stephanie, what about um but about ten ninety nine s You know, it's estimated that, you know, close to 60% of the U.S. workforce is going to be engaged with the gig economy in some capacity, might not be full-time, right? In the next five years, are they affected? Do they qualify?
00:27:38
Speaker
So this program, the program that we've been speaking about, the WOTC, the WOTC, it is applicable to W-2 employees only. So a contract and 1099 employees cannot participate in the program.
00:27:51
Speaker
They have to be W-2 employees. I'd guess that some misclassification you know and or you know retaining the right talent you know in the right way could be an obstacle, I guess, for a lot of companies. Do you see that?
00:28:08
Speaker
Not necessarily. i you know no No, not necessarily. Okay. Well, that's it's fair. So I'm kind of curious, you know getting back into some business leaders and leadership.
00:28:23
Speaker
um Tell me about some of these folks that you see who really nail it overall. of All the clients that you work with, are there some personality traits, some soft skills, other competencies that you see with folks leading high-performing teams you know that that you know might you might work with, right? They might find you know or or be eligible for these tax incentives, and they wind up retaining their folks for a really long time you know and building incredible work cultures.
00:28:52
Speaker
Yeah, I would say the one leading theme that I have seen across our clients, like very long standing clients that, you know, still, you know, John over at ABC company is still there for as long as I've been at CTI, right?
00:29:10
Speaker
When I look at some of the, you know, traits that attribute to these, you know, different, you know, cultures for our clients, I would say that it's leadership. So, you know, individuals and, and, you know, employees want to be led, like, you know, good leaders usually have a knowledge of what it takes to actually do the work um and not necessarily just kind of oversee. And, you know, they they're they're kind of have the knowledge of how to be able to do that work, how to be able to lead their individuals, um you know, provide very, um I'd say, aligned goal structure.
00:29:53
Speaker
you know, individuals, you know, tend to thrive in more of a structured environment. So I would say, One of the things that I have seen across our client base is really strong leadership. um And it doesn't necessarily mean a CFO or CEO. oh It can be your directors. It can be your you know your individuals you know that are actually on the manufacturing line, you know the supervisors that are overseeing the teams that have that good, strong leadership.
00:30:17
Speaker
I would say is what I have seen the theme in my experience with our clients. I love that. i mean, what role does trust, communication, you know, alignment play and in all these circumstances? You you mentioned, you know, alignment with goals and and things like that. um i mean, would you...
00:30:35
Speaker
qualify those other things, I guess, as as part of general leadership? Absolutely. I mean, absolutely. Speaking for just myself, um you know, with my team in particular, you know, to be able to have um their their trust, um their ability to um I would say, you know, we all have a common goal that we're achieving for our department, but they each have individual goals that they're trying to achieve as well.
00:31:02
Speaker
And I have always found in my career here that that type of environment everyone tends to thrive in. um when we, you know, every year we get new goals set for our department and, you know, we achieve, you know, we work to achieve those. And it's a common goal that we're all working towards.
00:31:17
Speaker
I also think that, you know, while you work hard, I think it's also good to have like some kind of employee events, you know, like, you know, we do a lot of potlucks in our, in our firm for different types of themed potlucks, you know, we'll do ah ah um you know St. Patty's Day and everybody has to bring in a green dish you know where everyone can collaborate and co-mingle and you know talk about their food dishes and you know we'll dress up for Halloween. you know Just fun things in the office that help bring an office culture because...
00:31:48
Speaker
you know with covet it kind of decimated that you know there was it killed the office culture um but we're finding our way back to it you know we have ah more of a hybrid environment where you know we get to work at home a few days a week and then we all come into the office a few days a week and it's um to build that back up but there's these different aspects to ensuring that your people are happy because you know happy employees thrive and you can't always please everybody but I can say with proper leadership, you you really can achieve some some pretty, you can climb some pretty high mountains together. And we've done that at CTI. so
00:32:23
Speaker
Yeah, it sounds like, you know, you talk you've talked a lot about technology. um You know, Mustard Hub's a tech company. Do you see any interesting changes in how companies are using software, even creating software to help support their their people, their operations? Tell me about what you guys do.
00:32:41
Speaker
I think for this these past like two years, you know really this past last year, you know you hear AI, AI, AI, right? yeah We've always relied heavily on technology um to administer this particular program, the WOTC, because it's a voluminous program.
00:32:59
Speaker
Meaning there's a lot of hires that are coming through you know screenings. It's a survey. It's a brief survey that's administered to determine if these new hires qualify. We have to be able to have the technology, whether our survey, our WOTC survey is implemented and integrated into a platform or they're using some form of a QR code to scan and take the survey.
00:33:17
Speaker
You know, we've had to adapt to those types of of. um I'd say new methodologies. If you think about QR codes, they're everywhere now. You know what i mean? You even have to read your restaurant menu on them. It's our most popular way of screening for the program is through a QR code. Everybody has everything on their phones now.
00:33:34
Speaker
um So being able to adapt to those new technologies to help customize our clients' needs, right? Whatever they're needing to you know administer this program amongst their new hires.
00:33:46
Speaker
um Our proprietary system, we've relied heavily now on AI to help automate a lot of this. um The WOTC is a federal program, but it's actually administered at the state level. So every state actually certifies that these individuals are, in fact, recipients of this program.
00:34:04
Speaker
um This past year, we worked heavily to help automate that process within the state databases. And there's 50 different states. you can imagine the type of work that's gone into it. But let me tell you, it's almost eliminated the need of a person who was manually going in there and downloading and doing all these things. Now we have scripts that are written and the system's just going in there and the doing its thing, you know?
00:34:26
Speaker
um And so, yeah, well, we've relied heavily on technology these past two years to help automate a lot of our processes and eliminate manual one-on-one touch that was that was happening before.
00:34:40
Speaker
that's That's incredible. And probably a ah lot of hours saved. um What do business leaders need to what do they need to be monitoring when it comes to their taxes and tax credits?
00:34:52
Speaker
If we're speaking directly to like some some small business owners you know or SMB leaders, what do they need to be looking at? I would say if you're a company that is profitable, you're hiring or you are you know involved in you know on the research and development side where you're developing a product or process. And this involves also um you know any type of software development.
00:35:20
Speaker
um It has to be here in the United States if you own real estate. um and you you know have buildings, you know there's a credit or deduction or refund that exists for those activities.
00:35:31
Speaker
As a business owner, if you're profitable, do you wanna pay tax? No. So how can we offset that through one of these types of programs? I would say you know profitability is at the forefront because if you can't if you don't have tax liability, you can't use the credits.
00:35:45
Speaker
So that's why I talk about being a profitable company. Okay, that was my next question. You have to be able to offset your tax in some form or fashion. And without being profitable, that you're not paying tax. Right. So you you need to be able to pay tax in order to do so. um But, yeah, I would say, the you know, the industries that we spoke about earlier, you know, in the session, Curtis, you know, those high turnover industries.
00:36:07
Speaker
um If you're in one of those industries and you're not taking advantage of the WOTC, we probably need to have a conversation. at least educate about Absolutely. Absolutely. I'd love to hear, a little bit of storytelling just about a team, a client you've worked with in the past, or maybe even a potential client that maybe in working with them, you recognize they had a major people breakthrough, right? We talk a lot about hiring, right? It's and hiring and and it is a hiring incentive.
00:36:39
Speaker
um So clearly you're in touch with HR very, very closely, like you had mentioned. um And you don't need to name names. I'm just really curious if you've noticed any of these sort of breakthrough moments where they realize something, they, you know, they, they really nailed it or, you know, found that maybe they were not doing things the right way.
00:36:59
Speaker
Yeah. I would say have a couple, i mean, i have lots of stories with our clients, you know, in ways that we've helped them achieve, you know, um you know,
00:37:11
Speaker
you know, some form of a offset of tax liability, whether that be at the federal level or the state level, depending on the states that they're located in. um But, you know, one that comes to mind in particular is we have um we work heavily in the franchisee space.
00:37:27
Speaker
And um this one in particular, it was in the QSR, you know, quick serve restaurant space. You know, they had, you know, close to, I'd say, 60 locations um had no clue.
00:37:40
Speaker
about you know what WOTC was. They had an enormous amount of hiring that they were doing. 150% turnover or more you know in that industry.
00:37:52
Speaker
um We came in and assessed the value of the program for them based on their you know you know onboarding you know numbers and the states that they were located in. They were also in various you know various states that offered state-level incentives.
00:38:06
Speaker
um Most of their locations were in the state of Texas because again, WOTC is a federal program. So even though we're headquartered in you know California, we have clients that are all over the nation.
00:38:17
Speaker
um This particular QSR had all of their franchisee you know in ah the state of Texas. um they The state of Texas also has a program that is um the Texas TANF recipient program. Temporary Assistance for Needy Families is what it's called.
00:38:35
Speaker
um In the state of Texas, it's up to a $2,000 refund for every TANF recipient that they hire. Now, one of the statistics that I'll share is that in the Work Opportunity Tax Credit, the WOTC program, the TANF program, the TANF category is the top two leading category out of every category in WOTC that qualifies, that individuals qualify under.
00:38:59
Speaker
So not only did we help save our QSR you know client that had no clue about WOTC, you know Had all this ah you know hiring that they were doing, um you know close to 3,000 individuals they were hiring annually.
00:39:12
Speaker
Were they able to take advantage of the work opportunity tax credit and also receive a cash refund um from the state of Texas for all of their TANF recipient employees? So it was like a two for one for them.
00:39:23
Speaker
They're so grateful. They're such a great client of ours. They've been with us since 2017. um And, you know, from there, we've built this very great network of referrals where they're like, you got to talk to, you know, my buddy, John, who owns, you know, ah you know, franchisee of Papa John's. They're not doing the Watsi. Can you talk to him about it? So I just think, you know, once you get to see the value of what these credits can do, he's now grown into other states because of Watsi.
00:39:49
Speaker
They're expanded into Arizona and New Mexico. um So it's just really great to see these stories flourish. And I have so many of them like that, right? Where, you know, clients that have come on board and some that have not ended up so well. But um in this particular instance, it was a great, you know, it was a really, it was a win for win. They were in Texas and you know, there's about 22 states that have these other level programs that we're able to capture within the same process as our WOTC.
00:40:14
Speaker
So there was no and additional administrative burden to their HR team. um So we got a two for one. Yeah, that's that's that is incredible. What do you think the future is going to look like for businesses in terms of new tax legislation changes to tax credits?
00:40:29
Speaker
What's on the horizon? Yeah, I don't foresee. I do foresee some changes coming. There's a couple of changes written in the big, beautiful bill, the BBB um Trump's big, beautiful bill. um But there are favorable changes, I would say, for the tax credit world. um And I really don't foresee these programs going away or being impacted. They may evolve or change a bit. Maybe regulations around them might get little more stricter in certain areas, or maybe guidance might be.
00:40:59
Speaker
released a bit, right? The guidelines might be loosened up a bit. Um, but for what they do for businesses, um, what they do for, you know, inclusion, you know, kind of the, um, you know, I'd say diversity in the workforce, creating diversity in the workforce.
00:41:16
Speaker
Um, I, I don't foresee these programs having much of a, of a big impact in terms of going away, coming, like I said, some programs come and go, but there's always a program in place to like, you know, um I say step in and and be the new program in place after that one.
00:41:31
Speaker
Any common financial or tax misconceptions that really persist for business leaders that you see all the time? um not Not to my knowledge because I'm not really on the side of like our CPAs. You know, I think for me in general, you know, just kind of the areas that I talked about, um what I see, you know, with our clients um And being able to be on the other side, right, of like, here's what we see for HR. Here's what we see in these different areas.
00:42:04
Speaker
I can't say I'm sure that there's a CPA could get on here and rattle off, you know, a ton of different, you know, um issues that that they see. But um or our owners could get on here and talk about that. But um that's not really my area of expertise in terms of, you know, that.
00:42:20
Speaker
All right. If you can give one piece of advice to a business leader who's really trying to get it right from day one with their people. We have like, you have one opportunity and they're about to turn around and walk in the other direction.
00:42:35
Speaker
What is that piece of advice that you give this business leader? I would say if we're talking about people, right, if we're talking about your people and, you know, how to keep your people motivated, um you know, I'm more of the servant type leadership, right? So I can speak really highly to that type of leadership.
00:42:58
Speaker
um I think being able to... um you know Nowadays, with the workforce, I'll just say, there is a bit of ah a diverse workforce where you you have you know a mix of millennials and Gen Z and you know each of those types of, you know you've you've got um Gen Xers and you've got this whole mixture of of different generations that come together.
00:43:21
Speaker
And so being able to navigate in those different generations and keeping everybody um you know, motivated and and working towards that common goal. um i would say to develop, you know, ah emotional intelligence, if you don't have it, you need to probably take a class to to to get that under wraps. And everyone thinks like, oh, yeah, like it's not even a big deal.
00:43:47
Speaker
Let me tell you. EI goes a long way, especially when you're dealing with different, you know, generations of of individuals. If you can tap into like if there was one thing I would say that has helped me um learn from my mistakes and learn how to read the room, if you will, it has been like being able to have emotional intelligence. It's the one trait that I would say every leader needs to be able to have.
00:44:12
Speaker
And if you don't have it, take a class for it. I think that that's really good advice and probably should be step number one before you try to do anything else. um Thank you.
00:44:24
Speaker
Thank you so much, Stephanie. You have had some really amazing tax and financial insights. So I'm so glad that we had you here today. And I really appreciate the opportunity to chat together.
00:44:35
Speaker
Thank you, Curtis. Thanks for having me today. I appreciate being here and being able to share some knowledge. And you know I thank you and um the team for inviting me. Awesome. Well, thanks for tuning in to Mustard Hub Voices Behind the Build. Share this episode and subscribe.
00:44:52
Speaker
And while you're at it, check out mustardhub.com to see how we help companies become destinations for workplace happiness and turn culture into a competitive edge. Until next time.