The Employee Retention Credit (ERC) has undoubtedly proven to be one of the most effective tax policies catered towards helping small and medium-sized businesses around the country. The cash refund the credit generates has helped scores of businesses weather the economic impact of the pandemic. The credit provides up to $5,000 per employee in refundable tax relief for 2020. For 2021, the incentive increased to $7,000 per employee per quarter in refundable tax relief. The IRS is responsible for issuing the cash refunds that come in the form of checks from the US Treasury.
Management at the IRS anticipated that between 75%-80% of small and medium-sized businesses were solid candidates for taking the ERC. However, the reality is – only a small portion of businesses have been applying for the credit. This points to billions of dollars left on the table that was earmarked for businesses trying to keep the lights on.
As has been suggested in past articles, the ERC is a wildly misunderstood tax benefit – with small and medium-sized business owners and managers either not knowing about the credit or being wrong about the credit due to following outdated guidelines, having been given bad information from counsel, or think the incentive is too good to be true.
Even more, employers do not appreciate that there is more than one way to qualify for the credit. First and foremost, a reduction in revenue will land you in a spot of eligibility for the credit. Secondly, if your business/non-profit has had a more than nominal impact due to federal/state/local or regulatory covid orders, the business in question qualifies. Easy example, think of occupancy, social distancing, cleaning requirements, and so forth as just a start of a long list of qualifying factors. Among the industries that are homeruns for eligibility, there exists restaurants, bars, hotels, manufacturers, film studios, law firms, non-profits, convenience stores, retail shops, and more.
Lastly, some business owners and non-profit managers wrongly think the ERC is only for entities that are either under water or experienced distress during the pandemic. This is far from the truth. Congress viewed this provision as a means of encouraging business owners to not only retain employees but hire new employees – effectively helping weather the economic costs and hardships brought on by the pandemic.
In practice, ERT Credit has found that an extremely diverse range of businesses are excellent candidates for the ERC. For many business owners and managers of non-profits, the ERC remains the go-to relief as it relates to the pandemic and one of the last sources of a cash injection that is helping businesses stay afloat. Yet hundreds of thousands of businesses and non-profit organizations around the country are failing to take advantage of the ERC. Billions of dollars are available for businesses and non-profit organizations to both retain and hire new employees. But you must apply.
As leaders in the market, ERT Credit has provided maximized computations to over one thousand employers across the country. See how ERT Credit can help you today by clicking here. No risk, no obligation - pay when you get paid.
