Why the ERTC is important to your company!

[Julio Gonzalez]

The Employee Retention Tax Credit (ERTC) was created as part of the CARES Act. The purpose of it is to incentivize bosses to keep their employees on the payroll even in the midst of the terrible impacts the businesses were feeling from the effects of COVID-19. When the credit originally came out, businesses that had already received a PPP loan were ineligible for the ERTC. However, that has since been removed. The ERTC has played a huge role in small to mid-sized businesses by helping them avoid layoffs.

What is the ERTC?

The Employee Retention Tax Credit is a tax benefit that is fully refundable. Companies are able to claim the tax credit equal to 50% of qualified salaries, up to $10,000 of wages per employee between March 12, 2020 and January 1, 2021. This credit has been extended into 2021 in order to provide more financial aid for those companies in need.

Am I Eligible for the Employee Retention Tax Credit?

Tax-exempt organizations and non-governmental employers, but not self-employed individuals can claim this credit. They must meet the following two factors:

1. An employer that experienced a substantial decline in gross receipts by more than 50% during a quarter in 2020 or 2021.
2. A business whose operations were fully or partially suspended for any quarter in 2020 or 2021 due to a government order.

How Do I Apply?

1. Ensure your employees are compliant with the ERTC conditions.
2. Go to the IRS ERTC website.
3. Determine the qualified wages for each quarter from the past few years to report on Form 941.
4. Additionally, you can report qualified family leave and qualified sick wages for which they are entitled to a credit.
5. Complete Form 941.
6. Prepare and submit the documentation required to the IRS prior to the quarterly deadline.

What are the benefits of the ERTC?

The maximum benefits are as follows:

• Q1-Q3 of 2021: $7000 per employee per quarter for a maximum of $21,000 per employee in 2021.
• 2020: $,000 per employee per year

I need help. What should I do?

The ERTC can be complicated. If you think your company may be eligible, I recommend speaking with your accountant, tax preparer and legal counsel as the first step.