The Employee Retention Credit (ERC) program is a valuable initiative designed to provide financial relief to businesses impacted by unforeseen circumstances, such as the COVID-19 pandemic. As a business owner myself, specializing in assisting businesses with navigating these programs, I have compiled a comprehensive guide to understanding the ERC, determining eligibility, calculating potential benefits, and navigating the application process. Additionally, I will guide you step-by-step through the process, ensuring you maximize the benefits available to your business.
What are Employee Retention Credits?
Employee Retention Credits are refundable tax credits designed to encourage businesses to retain their workforce during times of economic hardship. The program was initially introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in response to the COVID-19 pandemic. The goal of the program is to provide financial support to businesses that continue to pay their employees, even if their operations have been disrupted or they have experienced a decline in revenue.
How Do You Qualify to Receive an Employee Retention Credit?
To qualify for the Employee Retention Credit, businesses must meet specific eligibility requirements. These criteria may vary depending on the year in question and any changes to the program’s guidelines. However, in general, businesses need to meet one of the following requirements:
- Operations were fully or partially suspended due to a government order related to COVID-19.
- The business experienced a significant decline in gross receipts when comparing quarterly revenues.
- Started a new business after February 15th, 2020
It is essential to review the specific guidelines for the year you are seeking the credit, as eligibility requirements and credit amounts may change. Non-profit organizations and certain governmental employers may also qualify for the ERC.
How Much Can You Receive Per Employee?
The amount of credit a business can receive per employee depends on the year and any program updates. For example, in 2020, the credit was equal to 50% of qualifying wages paid to an employee, up to a maximum of $10,000 in wages per employee. This meant a maximum credit of $5,000 per employee.
In 2021, the credit rate increased to 70% of qualifying wages, with a maximum of $10,000 in wages per employee per quarter. This translated to a maximum credit of $7,000 per employee per quarter, or $26,000 per employee for the entire year.
How Do You Apply for an Employee Retention Credit? How Much Do I Qualify For?
To determine your eligibility and the estimated amount of credits you qualify for, head over to our website and click the green button. There, you’ll answer a few quick questions about your business, and you’ll get an instant decision regarding if we think you qualify for a credit or not. From there, our partners will reach out to you regarding the next steps, such as which tax documents are needed, pricing for the service, and more. (Note: you only pay if & when we help you to obtain an Employee Retention Credit.)
If you have any questions, or would like to see how much you qualify for, click here or you can message me to set up a time to chat.
Wishing you great success in all your endeavors,