Employee Retention Credit Explained (10 ERC Facts)
Imagine receiving a tax credit for $26,000 each employee you retained since the pandemic? That’s exactly what the employee retention tax credit is. Basically, you get a check for retaining employees. This article and my latest video explains 10 important details about the tax credit and how you can apply. Many people have heard of PPP but not many know about ERC so be sure to share this with friends.
- ERC is a stimulus program designed to help businesses that retained their employees during the Covid-19 pandemic.
- ERC was established by the CARES Act and is a refundable tax credit – a grant, not a loan – that you can claim for your business.
- The ERC is available to both small and mid-sized businesses. Sole props do not qualify and should start building business credit or apply for funding.
- The ERC is based on qualified wages and healthcare paid to employees.
- The Employee Retention Credit (ERC) is a credit for businesses that retained their workers in 2020 and 2021.
- The ERC enables you to claim up to $5,000 per employee for 2020. For 2021, the credit can be up to $7,000 per employee per quarter.
- The credit can be claimed for up to five employees, and is worth up to $26,000 per employee.
- The Cares Act 2021 legislation made it so that employees are now eligible for ERC even if they received PPP.
- The gross receipt reduction criteria for ERC is different for 2020 and 2021.
- Business owners can apply for ERC on their own but I highly recommend Bottom Line Concepts. Several changes and technical details recently changed, including how to determine qualified wages and which employees are eligible. Bottom Line Concepts can help you easily navigate through the process. They have clients who have received refunds from $100,000 to $6 million. Bottom Line Concepts are the ERC Specialists!
Apply for ERC on your own
To claim ERC, businesses must complete an application and form 941. The application includes information about the company and its employees, including their names, social security numbers, and dates of hire. The application must also include proof of the company's retention efforts, such as copies of letters or emails sent to employees reminding them of their job status. Your payroll processor should be able to assist you with many of the required tax documents
Proof of payment for the credit must also be submitted to the Department of Revenue. This can be done by submitting copies of invoices or receipts for expenses related to employee retention.
Apply for ERC with Bottom Line Concepts
See if you qualify here! Their services include:
- Thorough evaluation regarding your eligibility
- Comprehensive analysis of your claim
- Guidance on the claiming process and documentation
- Specific program expertise that a regular CPA or payroll processor might not be well-versed in
- Fast and smooth end-to-end process, from eligibility to claiming and receiving refund.
Do you have concerns about the program or how to work with Bottom Line Concepts? Leave us a comment below and we'll be happy to answer them!
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