How can the Employee Retention Credit help you keep your employees on the tax and payroll? The COVID-19 pandemic has had a profound impact on the economy, with many businesses experiencing significant financial difficulties. While some online businesses have thrived during this time, many brick-and-mortar businesses have struggled to survive. However, as we move into 2023, some businesses have been able to get back on their feet, thanks in part to government programs like the ERC. For those businesses that are still struggling, the ERC can be a lifeline, helping them to keep employees on payroll and continue operations.
The credit can provide significant financial support, and in some cases, can even exceed the employer’s payroll tax liability, resulting in a refund. This can provide much-needed cash flow for businesses that are struggling to make ends meet. For small business owners, the ERC is an opportunity to not only survive but also thrive during these challenging times. If you think your business may be eligible for the ERC, it’s essential to act quickly to take advantage of this opportunity. Consult with a tax professional or contact the IRS for more information on how to claim the credit.
The Eligibility for Employee Retention Tax Credit
To be eligible for the ERC, small business owners must meet certain criteria. Firstly, the business must have been in operation in 2021 or 2022. It must have also experienced a significant decline in gross receipts. This is generally a reduction of at least 20% in gross receipts in contrast to the same quarter in 2019. Alternatively, the business must have experienced a full or partial suspension of operations due to a government order related to COVID-19.
Furthermore, the ERC has size limitations for eligible employers. This depends on the quarter in which you claim the credit. For 2021, businesses with up to 500 employees are eligible, and for 2022, businesses with up to 1,500 employees are eligible. Additionally, eligible employers must have paid qualified wages to employees during the period for which the credit is claimed.
It’s worth noting that the ERC is available in addition to other COVID-19 relief programs, such as the Paycheck Protection Program (PPP). Small business owners who have already received PPP funds are still eligible for the ERC. But they must not claim the credit for wages that they pay together with PPP funds.
The ERC can be a valuable lifeline for small businesses struggling to stay afloat during the ongoing COVID-19 pandemic. We encourage small business owners to speak with a tax professional. Or to also contact the IRS for more information on how to claim the credit and ensure they meet the eligibility criteria.
Keeping your Employees on Payroll with ERC
One of the most significant benefits of the ERC is that it can help businesses keep their employees on the payroll. Eligible employers can use the credit to offset payroll taxes or request an advance payment of the credit from the IRS. This can provide much-needed cash flow for small businesses struggling to pay their employees during the pandemic.
Additionally, the ERC is available to businesses of all sizes, including tax-exempt organizations, and it can be combined with other pandemic-related tax credits and loans. This means that eligible businesses can receive multiple forms of relief to help them weather the economic impact of the pandemic.
Even if a business was able to survive the pandemic and is currently doing well, it can still take advantage of the ERC. As long as the business can demonstrate a significant decline in gross receipts or a full or partial suspension of operations due to government orders related to COVID-19, it may be eligible for the credit. This can provide additional financial support to help the business continue to grow and thrive, or to invest in new projects or expansions. Furthermore, the ERC has been extended through 2024. This means that businesses still have time to take advantage of this program. However, it’s important to act quickly to ensure eligibility and maximize the credit amount. Eligible employers should consult with a tax professional or the IRS to determine if they qualify for the ERC and to learn how to claim the credit.
Team AIS will guide you through the process
We hope you learned a lot regarding Employee Retention Tax Credit. At AIS, we understand that navigating the ERC and other pandemic-related relief programs can be overwhelming for small business owners. That’s why we offer expert guidance and support to help businesses understand their eligibility and maximize their benefits. We have helped many small businesses successfully claim the ERC and other forms of relief. We are also committed to helping more businesses in 2022 before the credit expires.
The ERC is a valuable tool for small businesses looking to keep their employees on payroll during the COVID-19 pandemic. Eligible employers should act quickly to take advantage of this credit before it expires at the end of 2022. For more information on the ERC and other pandemic-related relief programs, contact AIS today.