What is the Employee Retention Credit?
Simply put, the Employee Retention credit (ERC), is exactly what it sounds. It rewards business owners for keeping employees on payroll during the pandemic. Washington decision-makers are closely involved in this national effort to help the U.S. recover from the pandemic and come back stronger than ever before.
5 Things to Know about the ERC
To help you cut through the noise, we’re debunking the most common misunderstandings currently circulating in the ERC world. This is important:
Not every business qualifies for ERC
You likely can’t claim $26k for every employee
Not every COVID impact qualifies a business
Not every government guideline qualifies a business
Claiming PPP affects how much ERC can be claimed
How to Qualify
The ERC has gone through significant updates, so even if you or your tax advisor have reviewed this credit before, we encourage you to take another look with one of our specialists. The program is still not living up to its potential. Many business owners are disqualifying themselves prematurely due to misinformation about who qualifies and who doesn’t.
The overarching theme for businesses to focus on is how the coronavirus pandemic impacted our economy as a whole… so even if your business grew or was deemed an essential business during the pandemic, there are more qualifying factors to look at before you disqualify yourself.
The payroll tax credit is available to all essential and non-essential companies in any industry that has suffered the effects of the pandemic. Government orders–on federal, state, and local levels–are a major factor that many business owners had to adapt to over the last year and a half. One example of a affected business is a restaurant that couldn’t allow customers to eat indoors, or a manufacturer who had to slow down their operations because of new safety and health regulations.
These are some factors to consider when determining whether your business is eligible for the ERC.
Full shutdowns;
Partial shutdowns;
Operation interruptions
Supply chain interruptions;
Inability to access equipment
Limited capacity to operate;
Inability to work with your vendors;
Reduced services or goods provided to customers
Cut down on your hours of operation; and
Shifting hours to increase sanitation of your facility
To get more information about erc income go to our new site: read