Boost Your Business's Bottom Line The Employee Retention Tax Credit (ERTC): A Lifeline for Small Businesses in Challenging Times
As small business owners, we've all felt the sting of COVID-19's economic shockwave. It's been a challenging period, but in adversity often comes opportunity.
One such opportunity is the Employee Retention Tax Credit (ERTC)—a vital lifeline that has provided substantial financial relief for many businesses in these trying times.
A Closer Look at ERTC: A Lifesaver in Disguise
In its simplest form, the ERTC is a refundable tax credit that rewards employers for retaining their employees during economic downturns.
Born from the CARES Act in 2020 and later updated by the American Rescue Plan Act of 2021, its mission is straightforward: to offset a portion of wages paid during the pandemic, thus offering direct financial assistance to eligible businesses.
Understanding ERTC Eligibility: The Nuts and Bolts
The journey to ERTC eligibility primarily pivots around certain criteria closely linked to economic hardships induced by the pandemic.
These may include experiencing a significant drop in gross receipts or being forced into full or partial suspension due to government regulations.
Furthermore, factors like social distancing impacts and disruptions to supply chains are taken into account.
Businesses housing fewer than 100 full-time employees in 2020 or less than 500 in 2021 can qualify — extending even to startups launched after February 15th, 2020 and businesses that received a Paycheck Protection Program (PPP) loan.
Decoding ERTC Benefits & Calculations
When it comes to calculating your ERTC benefits as a small business owner, you'd consider up to 50% of qualified wages paid per employee during 2020 — capped at 10,000 per employee for the year.
Interestingly, this rate jumps to a generous 70% of qualified wages per quarter for 2021 — maintaining the same 10,000 cap per employee.
What this means is: Your company may be eligible for up to $26,000 per employee.
Breaking Down The Calculation
If you're making an ERTC claim for the year 2020, you can receive 50% of the qualified wages of your full-time workers quarterly.
Total wages considered are capped in 2020 at $10,000 per employee.
Therefore, the highest credit you'll receive per employee is $5,000.
For the year 2021, you can receive 70% of the qualified wages of your full-time workers quarterly for Quarter 1, Quarter 2, and Quarter 3. Total wages considered are capped in 2021 at $10,000 per employee per quarter. The maximum possible credit you can receive for each employee is $7,000 per quarter, amounting to $21,000 per employee for the year’s first three quarters.
Claiming Your ERTC: Navigating the Process
In order to claim your ERTC, you'd need to file an amended return using Form 941-X with the IRS. While this might seem intimidating at first, remember that attention to detail is key.
Be sure to keep thorough records of all relevant information which validates your eligibility and qualified wages paid — these will be needed should you ever face an IRS audit.
Busting Common Myths Around The Employee Retention Tax Credit
A number of misconceptions surround the ERTC.
Many believe only businesses that were fully closed or experienced catastrophic revenue losses can qualify — but this isn't necessarily true.
The reality is, even businesses that remained open or maintained stable revenues could still qualify based on other criteria. It's also worth noting the ERTC isn't a loan — it's a credit that doesn't need to be repaid.
Finding Professional Guidance
Navigating through the labyrinth of ERTC can feel daunting and may require professional assistance—an accountant or tax consultant with solid experience handling ERTC could prove instrumental in ensuring accurate calculation and filing.
Remember, as small business owners, we're known for our resilience and adaptability.
Your Next Steps:
- Download our Essential Checklist: 16 Factors To Consider When Selecting An Employee Retention Tax Credit Professional. Get It Here
- Get equipped with knowledge. Our comprehensive report provides everything you need to smoothly navigate the complexities of the ERTC — helping your business rebound stronger post-pandemic.
Empowering Financial Freedom: ERTC.com
We’re not just a company - we’re your partners in navigating the complex Employee Retention Tax Credit filing process.
Our main objective? To ensure you get the highest possible refund.
Offering an unbeatable service - our unique “Power of Three” accounting process. This involves three different CPA teams meticulously cross-checking your final refund amount, providing you with complete confidence in the accuracy of your claim.
We’re about more than just refunds. We’re about empowering you to Build. Grow. Scale.
A dedicated team of over 3,200 professionals across the nation is standing by, ready and eager to help you unlock the funding you deserve. We’ve already helped over 19,000 businesses, with over $1.3 billion in refunds affecting 401,352+ eligible employees.
The deadline to file is approaching. Go to www.GetERTC.win and get started with your refund estimate today.