BUSINESS | TAXATION |
REVEALED: HOW BUSINESSES OWNERS ARE GETTING BILLIONS IN CASH BACK FROM GOVERNMENT TO HELP RETAIN JOBS
Joanna Smith Updated January 10th, 2022
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Find out if you are eligible and how much you can claim from ERTC at no cost.
The Employee Retention Tax Credit (ERTC) is a refundable tax credit under the CARES Act to help businesses retain jobs.
The COVID-19 pandemic impacted businesses and triggered one of the worst jobs crises since the Great Depression.
The government has authorized unprecedented stimulus to small and mid-sized businesses, and yet billions of dollars are still unclaimed.
60% Businesses surveyed in a Bredin Snap Poll said they were not aware of ERTC.
There is still a lot of misunderstandings and confusion about the credit.
Many business owners don't know they can now receive relief under both the PPP and ERTC initiatives.
The tax code is complicated enough for CPA's and many are not able to keep up with complex and changing regulations.
Expert assistance to file ERTC can make this complicated process simple and secure.
Businesses were severely impacted by the COVID-19 pandemic, and the negative impacts on small and mid-sized businesses with less than 500 employees persist. In addition, small businesses report facing new challenges with hiring difficulties and with supply chains. Many businesses across the country are struggling to keep employees and attract new staff in a tight labor market.
Employers are being forced to offer higher pay and more benefits to staff up and take advantage of a booming economy post-Covid. Also, they are competing locally with major corporations across the U.S. that have been raising wages and offering bonuses to fill staffing shortages.
After a devastating year, many small-business owners say they are optimistic for 2022. According to a new survey from the U.S. Chamber of Commerce Small Business Index and insurance giant MetLife, 77% of small-business owners say they’re optimistic about the future of their business, and 62% say their business is in good health.
Nevertheless, funding and grant programs remain critical to helping small businesses continue to recover. Many are entitled to get money back from the government through a credit against the employment taxes they pay. Small and midsize businesses can get cash directly from the federal government through the Employee Retention Credit (ERTC), which offers businesses money back on a percentage of wages paid to their employees.
Many business owners are already taking advantage, but still, many small businesses don’t know about it. Over 60% of businesses surveyed in a Bredin Snap Poll said they were not aware of ERTC.
“One of the major programs that has been largely unknown is the employee retention tax credit. A lot of people think of a tax credit as a reimbursement coming later, but this gets paid upfront.”
- Sarah Crozier, spokeswoman for the Main Street Alliance, a small business advocacy organization on CNBC.
The ERTC started with first federal Covid economic relief package, in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and it intended to help workplaces keep employees on their payroll during the downturn caused by the COVID-19 pandemic. Eligible employers can get a refundable payroll tax credit equal to a percentage of eligible wages.
Originally, employers were not allowed to obtain a PPP loan and claim the ERTC. The Consolidated Appropriations Act provided a much-welcomed modification to the CARES Act by allowing all eligible employers to claim the ERTC, even if they have received a PPP loan. Any wages outside those paid for from PPP loan funds are still eligible for the ERC.
Recently, the Act also expanded to give businesses the opportunity to claim more money back from wages they paid to employees in 2020 and 2021. Businesses can get money for wages paid through the end of 2021 and retroactive payments for 2020 wages.
Eligible businesses can claim up to 70% back on up to $10,000 in wages paid to employees, or a maximum amount of $7,000 per employee for each quarter of the calendar year. It adds up to a potential total of $28,000 in cash back per employee annually. The Employee Retention Credit is geared towards small and midsize businesses because you currently need to have 500 employees or less to be eligible.
On top of the employee threshold, businesses currently need to see a 20% reduction in gross receipts in one 2021 quarter compared to the same quarter in 2019, or if they didn’t see this reduction, businesses would need to have been partially or fully shut down by government during the quarters for which they are claiming the ERC. The 2020 CARES Act legislation required gross receipts in a calendar quarter below 50% of gross receipts when compared to the same calendar quarter in 2019 to qualify.
How Does My Company Claim the ERTC?
The ERTC is a payroll tax credit, not an income tax credit, and not related to your annual business tax returns or your profit/loss from the business. Although it is called a tax credit, it is most frequently received as a cash payment from the IRS. You may also use it to offset future payroll tax payments.
The ERTC is accessed by filing a 941-X Amended Quarterly Payroll Tax return. The IRS will accept these for up to three years after the initial filing, so the ability to participate in ERC program may continue into the end of 024.
Eligible employers can claim the ERTC by computing the amount for a pay period and decreasing the required payroll deposit by that amount. In anticipation of receiving the ERTC, employers can reduce employment tax deposits with the IRS or request an advance of the ERTC from the IRS on Form 7200 Advance Payment of Employer Credits Due to COVID-19.
Employers can file ERTC themselves and there are plenty of how-to videos available on YouTube.
However, like most economic development business tax incentive programs, the Employee Retention Credit has certain complexities that may impact receiving an accurate, optimized, and audit-ready number. It is important to fully document processes and procedures, organize the records, and avoid any risk areas in advance of a potential IRS audit of the claim, which may come years later.
The ERTC has numerous issues such as Controlled Group criteria, documenting qualification methodology, coordination with PPP loans, allocating healthcare expenses to the appropriate time periods, etc. Your payroll company does not have all this information, and your CPA may not have the specific expertise to ask.
The use of ERTC specialists can help prevent disaster and/or leaving money "on the table".
Services like ERC Today, can use their expertise to calculate the exact value of the credit you can receive from the IRS, at no cost, before signing any contract, just by filling a simple form. ERC Today can make the application process within 5 days or less.
One of the main benefits of having professional assistance for filing ERTC is that you can maximize claims for keeping Americans employed. A specialist has in-depth knowledge of all IRS regulations and will be able to understand how your business was impacted in each eligible quarters and how many employees qualify, even if you received a PPP loan.
Having a secure, fast, streamline process to verify the employer eligibility, showing, beforehand, how much cash can be claimed turns the application for ERC a no-brainer for business owner.
Employee retention tax credits could create significant cash flow for businesses that qualify.
A single-location steakhouse from North Carolina with 52 employees at 2020 received an ERC rebate of $213,029.88.
A Marketing Agency from Tennessee with 21 employees claimed $50,954.46 for 2021.
A restaurant from Washington with 11 employees claimed $528.340.02.
A HVAC company from Florida with 23 employees claimed $39.262.33.
When the Employee Retention Credit was included in the CARES Act, we knew we wanted help navigating the guidelines, calculations, and paperwork so we could maximize our tax credit and get everything filed correctly. We were very pleased with Stephen and his team at ERC Today. They helped us prepare and monitor the refunds across several small businesses.
- Leslie Estep
Earlier in 2021, I heard about Employee Retention Credits available through the CARES ACT, given the COVID pandemic. Without much knowledge on the subject, I was referred to ERC TODAY. Stephen and the staff were quick to explain the details of this program... Sounded great... get some Money back for having kept staff employed during the pandemic.. I was qualified, and I followed up with the Payroll info needed for ERC to apply for these credits. Unlike the PPP Loan, these credits can be spent on any cash needs and ARE taxable income.. I have, with ERC's help, received funds and will plan with my CPA on how best to handle taxes.. Great program, increased income to secure your business in this weird time.. And very clearly noted that these funds will be considered taxable income. Clarity provided is so important. Thanks to ERC for their hard work.
- Mike Heafner, Managing Member Hef's on Park LLC
You can easily verify if you are eligible for ERTC, by filling out a short form with your company's information. Our tax and accounting experts will analyze your information and let you know exactly how much cash you can claim. This is done at absolutely no cost and no commitment. Afterwards, once you know that you qualify and how much you can claim, you can then decide if you want to move forward with the filing and application process by yourself or hire an ERTC service for a small fee.
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