They’re lazy. Inexperienced with the rules related to the CARES Act, and don’t want to deal with more paperwork. It's not a loan. It's just YOURS.
As a small to medium-sized business, it’s likely that you were negatively impacted by COVID-19, and you certainly weren’t alone.
Due to financial suffering across the country, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help get businesses back on their feet — with a special section called the Employee Retention Credit (ERC).
The Employee Retention Credit (ERC) was developed to encourage and support employers who retained existing employees throughout 2020 and for the first three quarters of 2021 by offering a generous payroll tax refund through the IRS.
Eligible businesses can receive a refund of up to $5,000 per employee for all of 2020 and up to $7,000 per employee kept on the payroll for each quarter for Q1 through Q3 of 2021. That’s a total refund of up to $26,000 per employee kept on your payroll.
The program rewards those who kept employees on payroll in 2020 and 2021.
The ERC has since undergone expansions and multiple amendments by Congress.
The ERC refunds are most often received as a check from the US Treasury.
The same relief bill that created PPP loans also created the ERC.
The Employee Retention Credit is available to employers of any size, including tax-exempt organizations. It also may be available to tribes, if they operate a trade or business.IRS Website
The Internal Revenue Service urges employers to take advantage of the newly-extended employee retention credit...IRS Website
Thousands of small and medium-sized businesses will qualify. Unfortunately, many business owners are missing out on a valuable opportunity by being misinformed or relying on outdated information.
At Simmons, we understand that fully comprehending the ERC can be a complicated and confusing process. ERC qualifications and limitations have been amended by Congress several times since the initial rollout of the Employee Retention Credit.Additionally, since the ERC is related to your payroll, not your business income tax returns, it requires a series of payroll tax filings that many CPAs may be unfamiliar with or not completely confident in using. That is why we recommend working with a account executive who can provide you with updated information and help your business get the full amount that it’s eligible to receive.
The government has defined a “small business” as:
This was expanded for the ERC 2021 to include some governmental employers.
Experienced a significant decline in gross receipts during the 2021 calendar quarter, more than a 20% decline versus the same quarter of 2019, and a 50% decline in the 2020 calendar.
Had operations that were impacted by government orders due to COVID-19, resulting in limitations of commerce, travel or meetings.
If your business was impacted due to a government order that caused one or more of the following, you may qualify:
- Your business operations were interrupted.
- There were interruptions with your supply chain.
- There was an inability to access equipment.
- Your business had a limited capacity to operate.
- You were unable to work with your vendors.
- Your hours of operation were reduced.
- Your available services offered to customers were limited or reduced.
Even if your business and your tax advisor looked into the ERC
before, we urge you to review it again.
