As a business owner, you hate to miss deadlines and love to increase your profits. With the Employee Retention Credit (ERC), you can do just that and there’s still time! The ERC is a fully refundable tax credit available to eligible employers who were affected by COVID-19 and are facing financial hardship. It was created with severely financially distressed employers in mind and helps businesses cover certain costs associated with keeping their employees on payroll during times of economic hardship. With the deadline on the horizon, let’s dive into how the ERC works, how it can benefit your business, and employee retention credit deadline 2023.
What is the Employee Retention Tax Credit?
The CARES Act established the Employee Retention Tax Credit (ERTC) to assist companies in maintaining employees on their payrolls. With this credit, qualifying small-medium sized businesses and employers can receive up to 50% of qualified wages paid. ERTC is a clear advantage for those looking to maintain their workforce amid economic hardship caused by COVID-19.
Small businesses everywhere are scratching their heads trying to figure out “what is ERTC?” The National Federation of Independent Business (NFIB) reports that only 4% of owners have heard about this government program, yet the potential it holds for business growth and success may astound you. Exploiting the opportunities available through ERTC can vastly benefit your business in unprecedented ways!
With employee retention clearly a top priority, the government understands that wages must be kept stable to ensure staff are retained. The Employee Retention Tax Credit (ERTC) acts as an invaluable life raft in helping companies and eligible employers ride out the turbulent events of recent years. This has enabled employers to continue paying their employees, so both parties can stay afloat during these difficult times.
Who’s eligible for the Employee Retention Credit?
The ERC is available to employers whose operations have been partially or fully suspended due to COVID-19 restrictions, or those who have experienced a significant decline in gross receipts as a result of COVID-19. An eligible employer must also have fewer than 500 full-time employees in order to be eligible for the credit.
The Employee Retention Credit (ERC) offers businesses that have faced financial hardship due to COVID-19 a way to offset certain costs associated with retaining their workforce. The credit is available to the eligible employer whose operations have been partially or fully suspended by government orders, or those who have experienced gross receipts drops of more than 50% in comparable quarters as a result of the pandemic.
Any business that is exempt from the Work Opportunity Tax Credit (WOTC) is also eligible for the ERC. This includes tax-exempt organizations and those businesses with wages paid to family members such as sole proprietorships and farms.
Can you still apply for Employee Retention Credit in 2023?
The answer to the question, “Can you still apply for Employee Retention Credit in 2023?” is yes.
The Employee Retention Credit (ERC) was created by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) and it is meant to help employers affected by COVID-19 who are facing financial hardship. This credit is still available and employers who have fewer than 500 full-time employees can claim up to $26,000 per employee per calendar quarter.
It’s important for employers to keep an eye out for any additional funding opportunities and tax credits that become available in order to maximize their benefit from these programs. Additionally, employers should consult with a qualified accountant or tax professional when any such programs arise in order to determine eligibility and ensure proper use of any funds received.
Is there a deadline to claim Employee Retention Credit?
Yes, there is a deadline to claim the Employee Retention Credit (ERC). Companies can now benefit from the tax credit for up to three consecutive years. This means you are eligible to claim expenses made in 2020 until April 15, 2024 and 2021 expenditures by April 15, 2025.
It is important for employers to be aware of the deadline in order to take full advantage of the incentives provided by this tax credit. Employers should use any additional funding opportunities or tax credits that become available in order to help them remain profitable during these difficult times.
The amount of the ERC varies depending on qualifying wages paid during particular periods of time, but can be up to $5,000 per employee per calendar quarter. This allows eligible employers to save money while still providing compensation packages that attract and retain quality talent.
Furthermore, businesses who are eligible for the Employee Retention Credit can benefit from significant savings when it comes to payroll costs associated with keeping their employees on staff during times of economic hardship.
Businesses should keep track of deadlines and other requirements related to claiming the credit in order to take full advantage before time runs out. Ultimately, taking advantage of this opportunity could potentially offer eligible employers much needed relief during these difficult times and help them remain profitable in the long term.
I received a PPP Loan, can I still apply for ERC?
As a business owner, you may have received a Paycheck Protection Program (PPP) loan to help cover payroll costs during the pandemic. With so many restrictions on how PPP funds can be used, it may be hard to keep your business afloat. What if you need additional relief?
The Employee Retention Credit (ERC) offers businesses that have faced financial hardship due to COVID-19 an additional way to offset certain costs associated with retaining their workforce. Even if you’ve already received a PPP loan, you may still be eligible for the ERC as long as you meet all other eligibility requirements. So don’t miss out on this opportunity – apply for the ERC today!
How Does the ERC Work?
The ERC is equal to 50% of wages paid up to $10,000 per employee per calendar quarter. This means that if an employer pays an employee $10,000 in qualified wages during a calendar quarter, they can claim up to a $5,000 tax credit on their taxes.
If an employer continues paying wages throughout 2021, they can earn up to a maximum credit of $14,000 per employee for that year ($7,000 x 2 quarters). Nonrefundable credits like this will reduce any future income taxes you may owe and can even be used as an offset against payroll taxes owed by an employer.
How is ERC calculated?
In order to determine whether you are eligible for the ERC, it is important to first calculate your number of employees in 2020 and 2021 – including both part-time and full-time staff who received a continual salary throughout each calendar year. If this figure totals zero, unfortunately you fail to qualify for the ERC; however, there may still be options available when seeking paid leave credits.
Then, did your business have any closures, whether full or partial suspension of operations in the years 2020 and 2021 because a governmental authority mandated it? If so, these closures might make you qualify for benefits per the criteria outlined.
Next, to be eligible for the Employee Retention Credit (ERC), you must demonstrate quarterly revenue losses of at least 50% versus 2019 in 2020 and a 20% decrease from the same quarter in 2020 for 2021. To do this, receipts showcasing your business’s gross income will need to be submitted.
After that, you must assess the qualified wages you have been paying to your employees during any of the previously specified suspension periods. This would include all salaries or hourly pay and health insurance costs for full-time and part-time staff members in both 2020 and 2021.
What are Qualified Wages?
Qualified wages paid are any employee wages paid between March 13th, 2020 and December 31st, 2021. These qualified employee wages must meet certain requirements outlined by the IRS.
Qualified wages paid requirements include:
- Only the first $10k of wages paid per employee in each quarter are eligible for the tax credit
- The employer must pay at least 50% of each employee’s health insurance premiums
- The amount claimed cannot exceed the total amount of Social Security Taxes paid on behalf of all employees during that same period.
Note that qualified wages do not include bonuses or vacation pay unless it meets one of these three criteria as well as other criteria determined by the IRS so it’s important that you check with your accountant before claiming any credits related to these types of expenses.
What Is A Recovery Startup Business?
Recovery Startup Businesses are any businesses that opened during the pandemic, per the American Rescue Plan Act.
To be considered recovery startup businesses and be eligible for this benefit, businesses must meet these qualifications:
- Established your business after February 15, 2020
- Aggregate revenue from both of 2020 and 2021 tax years is under $1 million
- Have at least one W2 employee aside from proprietors or their relatives.
If you bought an operating business before February 15, 2020, you may or might not qualify as a recovery startup business. It all depends on your individual situation since the rules around this eligibility requirement are complicated. Through working with experienced ERC tax experts, it can be much easier to determine whether you meet the criteria.
Is ERC taxable income?
Employees are in luck – the ERC is a non-taxable income, meaning that they will not have to pay extra taxes on qualified wages covered by this program. On the other hand, an eligible employer can claim it as a Business Expense and reduce their taxable liabilities. This tax relief measure has been implemented for both employees and employers alike; hence, it presents an extraordinary opportunity for businesses to retain key personnel during these tumultuous times.
What can I use ERC funds for?
Employers can use funds from the Employee Retention Credit to cover a variety of expenses related to their employees. This includes qualified wages, health insurance premiums, and other benefits. The credit can also be used to cover a portion of the employer’s portion of Social Security and Medicare taxes paid on qualified wages.
ERC funds can be used to cover expenses related to employee recruitment, training, hiring costs, and bonuses awarded as part of an incentive program.
Employers are encouraged to use these funds for long-term investments that will have a positive impact on their workforce such as professional development programs or educational assistance with tuition expenses for employees.
The credit is refundable which means employers may receive an immediate cash payment even if they are unable to utilize all of the credit amount by reducing their quarterly payroll tax liability – this makes it an attractive option for employers in need of quick financial relief during this difficult time.
Furthermore, employers can retroactively claim any unused credit amounts going back up to three years prior – meaning they can claim expenses made from 2020 until April 15th 2024 and 2021 expenditures by April 15th 2025.
Do I have to pay back the money received?
Absolutely not! The Employee Retention Tax Credit is treated as a reimbursement for paid qualified wages, so it’s like you’re owed the money by the government. It can be viewed as a reward for surviving and continuing to operate your business during these difficult times. And although it may be referred to as a loan, don’t worry – you’ll never have to pay it back!
How do I claim my ERC?
Employers may not be aware of all the available funding opportunities or tax credits that could help them stay afloat during these difficult times. Furthermore, employers must also contend with deadlines and other requirements related to claiming such credits in order to take full advantage before time runs out.
Estrada Vega Capital‘s ERC service can help you claim your Employee Retention Credit (ERC) quickly and easily so you can maximize your savings while still providing compensation packages that attract and retain quality talent.
Our experienced team will guide you through the process of calculating your potential credits, including assessing qualified wages, as well as helping you understand the broader implications of claiming the Employee Retention Credit.
We understand that every employer’s situation is unique, so our team will work with you to develop a tailored approach to ensure that you benefit from any savings made while still providing competitive compensation packages for your employees.
In addition, we’ll help make sure all deadlines are met and paperwork is filed correctly in order to ensure maximum savings on payroll costs associated with keeping your employees on staff. Furthermore, our team can provide insight into how other businesses have used the credit to their advantage and what strategies could be employed by your business for even more effective results.
Click here to schedule a free ERC consultation.
How long does it take to get the Employee Retention Credit refund?
According to the IRS, those who have already filed their forms can anticipate a reimbursement between 6-10 months from the filing date. Those wishing for quicker payment may qualify for an ERC advanced payment loan that is repaid once the IRS confirms and dispenses funds. This option provides businesses with their reward faster than waiting up to one year!
By taking advantage of the Employee Retention Tax Credit, employers can receive financial relief to help offset the costs associated with keeping their staff employed and wages paid. Whether businesses are ready to claim their credits or just beginning to explore their options, Estrada Vega Capital‘s team of experts can help guide them through the entire process – from calculating potential savings to filing for reimbursement – so they can make sure all deadlines are met and maximize their savings.
The Employee Retention Credit is an invaluable tool available to employers struggling with financial hardship due to COVID-19 restrictions or downturns in revenue. By utilizing the ERC properly, businesses can save money on their taxes while still providing much needed employment opportunities for their staff members – all at no additional cost!
Whether businesses are ready to claim their credits or just beginning to explore their options, Estrada Vega Capital‘s team of experts can help guide them through the entire process – from calculating potential savings to filing for reimbursement – so they can make sure all deadlines are met and maximize their savings.
If you are eligible for the Employee Retention Tax Credit, it means that your business and yourself require and deserve it. A prosperous economy must have healthy businesses, which is why our government has offered this incentive to aid those who face economic hardships. Taking advantage of the Employee Retention Tax Credit will reward all your efforts in making a success out of these difficult times. Don’t miss this chance to help secure your future!
You still have time to apply for the ERC program in 2023 and reap its rewards! To access the Employee Retention Tax Credit, simply fill out a Form 941-X. The statute of limitations allows you up to three years from when you originally filed your Form 941 to submit an amended quarterly return. If, say, your business was eligible for the Employee Retention Tax Credit program during Q3 2020 – then any amendment needs to be presented by October 2023. Plus, businesses are granted until 2024 if they want go back on their payrolls and use it as evidence that they qualify for this refundable tax credit initiative!
With Employee Retention Credit services, you may have to pay a commission when your company receives the funds. Still, it’s worth considering due to being eligible for possibly receiving an extraordinary government stimulus grant of up to $26,000 per employee – this is the largest such program in history!
If you want to take advantage of the Employee Retention Tax Credit, it’s essential to understand how your business could benefit. The amount is based on lost revenue, the number of employees retained annually and whether your company was impacted by mandatory shutdowns. Through this guide, we’ll walk you through each step needed for calculating eligibility – so don’t miss out on potential savings!
Estrada Vega Capital‘s experienced professionals can help you calculate your ERC refund. Click here to schedule a free consultation.