The effects of the COVID-19 pandemic have been far reaching, with businesses from all sectors facing immense struggles. Unfortunately, this has taken an undeniable toll on employment, sparking what has been coined “the Great Resignation” (aka “The Big Quit”). According to the Bureau of Labor Statistics, over 47 million people left their jobs in 2021. Sadly, many small business owners have found themselves in particularly dire straits, particularly with worker shortages. Some estimates claim that within just one year there were 200K additional business closures compared to regular years prior to 2020.
In response to the pandemic, the government provided generous financial assistance through multiple relief initiatives. Most notable was the Payment Protection Program (PPP), which supplied a remarkable 10.7 million borrowers with loans over $780 billion in forgivable funds. This successful program enabled businesses to retain their staff and avoid job losses due to furlough or layoffs.
Small businesses have been hit hard by the pandemic, but there is a light at the end of the tunnel. The Employee Retention Credit (ERC) was created to provide some financial reprieve for struggling employers. With this guide, learn how to take advantage of this and claim it, plus how to contend with common challenges you may face along the way!
An Overview of the ERC
In the face of unprecedented economic disruption from COVID-19, the U.S. government responded decisively with passage of the CARES Act in March 2020 to offer financial lifelines for Americans and businesses struggling through a nationwide lockdown. Despite its swift implementation, unfortunately, its effects are still being felt one year on.
Lawmakers crafted the Employee Retention Tax Credit to help employers keep their employees and weather challenging times. An eligible employer that faced closure due to government-imposed restrictions or experienced a significant decline in revenue during 2020/2021 can benefit from this credit. Here are some essential points worth noting:
Qualifying Amounts
The government recently increased the tax credit for 2021, taking qualified wages up to 70%, with a maximum of $28,000 per employee annually. This is an advantageous opportunity that business owners can capitalize on this year.
Qualified Wages
Businesses can access the Employee Retention Credit for 2020 and 2021 to cover wages paid during periods of government-mandated closure or when gross receipts were at least 50% lower than those in 2019. This includes associated health insurance costs, giving companies a valuable lifeline through these challenging times.
Cash Payment from the IRS
Struggling to make payroll tax payments? The IRS has you covered with its program. Not a traditional income tax credit, this payment is issued by the IRS as cash and can cover employers’ debt on their quarterly returns.
Challenges of Applying for the ERC
Any time tax law changes, there will be new provisions to remember as you try to take tax credits or deductions. Common challenges for the employee retention tax credit include:
- Understanding business eligibility requirements
- Figuring out which wages qualify and getting the percentages right for the applicable year
- Making sure you apply correctly and by the deadline
- Completing the process when you own multiple businesses
Any of these challenges can keep employers from moving forward with the ERC. This is why it is always wise to ask for help when you’re unsure what to do next.
How to Get Help Applying for the ERC
With the Employee Retention Credit, your business has a golden opportunity to maintain financial stability and keep staff employed. You can get all the assistance you need through “Oppuous’ Cost Recovery Partners.”. It is here to help every step of the way with our quick, easy tax consulting services and efficient filing solutions, plus dedicated client support – all designed with you in mind! Our team can answer any questions about combining this credit with other loans so you get exactly what your company needs.
Applying for loans and tax credits can be scary, and we understand that. The team of experts that have teamed with Oppuous is at your service. Let’s help you get your business the tax credits that are rightfully yours.
Get in touch today to learn how you can join our team: https://letsmeet.io/oppuousllc/15-minute-initial-consultation
