The latest relief package has greatly expanded the cash funds available to American businesses but there is a lot of misinformation surrounding its provisions. Guidance was just released by the Service, however, and businesses that thought they do not qualify for relief incentives need to take another look.
My colleagues and I will be hosting a presentation to go over the power the Employee Retention Credit can have for your business and why all business owners not claiming it need to seriously reconsider. The new IRS guidance makes it clear that the majority of the reasons businesses think they don’t qualify are wrong.
Register to the right for a short presentation that could help you reinvest significant funds back into your business.
Also, check below for the Top 10 Employee Retention Credit Myths and see if any apply to you:
Top 10 Myths Dispelled about the NEW Employee Retention Credit
Now you can claim both! The Consolidated Appropriations Act (CAA) of 2021 removed the limitation on only claiming one or the other.
CPAs are focused on your Federal Income tax and not your payroll taxes. Meanwhile most payroll companies will ask you to do all the work to earmark who you want to claim the credit for and will not perform an employee by employee analysis on whether you are maximizing or double claiming your available benefits.
PPP will only account for 2.5 times your monthly payroll expenses and is meant to be spread out over 6 months. This leaves plenty of uncovered wage expenses for claiming ERC.
The CAA has changed the qualifications so that a reduction of 20% now qualifies.
Even a partial suspension or impact to your business would qualify. For instance, a partial shutdown, a disruption in your business, inability to access equipment, having limited capacity, shutdowns of your supply chain or vendors, reduction in services offered, reducing hours to accommodate sanitation, shut down of some locations and not others, and shutdowns on some members of a business are all scenarios that still qualify for the Employee Retention Credit.
Even if you are deemed essential, an impact or change in your business may still qualify you. Even if you were open but your vendors were closed down or you can’t go to a client’s job site, you may still qualify. The scenarios above in Myth 4 would apply here as well.
Great news! If your company has grown during quarantine but experienced a full or partial shutdown, there are expenses you can still qualify for!
With the introduction of the CAA, you have the option to look at one quarter prior to determine qualification. This means we can determine eligibility based on lost revenue in 2020. Also, if you were subject to a shutdown you may qualify regardless.
This is a refundable credit against payroll taxes. Meaning any credit overage above tax liability is sent to the taxpayer as a refund.
The employee count restriction is based on full time equivalent (FTE) employees which is a more involved calculation than just counting everyone in the office. We helped a business with 640 employees and the FTE calculation put them at under 500. Furthermore, if you paid any employees to NOT work, then the employee count restriction would not apply for those employees.