How the Employee Retention Credit Can Help Your Business
Let’s talk about ERC
By Randy Pumputis
Payroll/HR Hospitality Professional
Heartland Payroll
With many Entrepreneurs making their way to the Sunshine State, there are many opportunities available to assist with their operations, continued success and retention of valuable staff. Let’s talk about ERC the Employee Retention Credit and how it can help your business.
The Coronavirus Aid, Relief, and Economic Security (CARES Act) was signed into legislation to provide economic relief to employers and employees as a result of the COVID-19 pandemic. One part of the act is the Employee Retention Credit.
In 2020, the Employee Retention Credit was offered as a refundable tax credit to be used against certain employment taxes. It has been modified and expanded into 2021 with the Consolidated Appropriations Act and the American Rescue Plan. Note the highlights below.
2020 Employee Retention Credit Highlights
- Qualified wages = gross wages + employer health plan expenses
- The credit is equal to 50% of the qualified wages and the employer health plan expenses paid from 3/12/20 through 12/31/20
- Clients who qualify could receive up to a $5,000 tax credit per employee for the year based on $10,000 in qualified wages
2021 Employee Retention Credit Highlights
- The ERC was extended through at least 9/30/21, and increased the amount to 70% applicable to the first $10,000 of qualified wages per quarter for each employee, for a maximum tax credit of $7,000 per quarter and $28,000 for the year per employee
Qualifications
- In general, clients should seek the advice of their CPA to determine eligibility
- Wages paid with a PPP loan are not qualified wages and are not eligible for the tax credit
Employee Retention Credit – Amending Returns
- Employers who wish to retroactively claim the ERC may need to amend their Q2, Q3, and/or Q4 2020 returns as well as 2021 returns. The opportunity to amend the returns have been extended for 3 years.
Currently we are seeing an average refund check of $85,000 to individual businesses that qualify.
For new Entrepreneurs, there is also an opportunity to earn funds back through the Recovery Startup Business program if meeting the following criteria:
- Began operations after February 15, 2020
● Generates annual gross receipts that do not exceed $1 million
● Is not required to meet the gross receipts test
● Would not otherwise be eligible under the general eligibility conditions involving suspended business operations or a decline in gross receipts.
Employers that meet the criteria of an RSB are eligible for credits equal to 70% of wages paid to each employee per quarter up to a maximum of $10,000 per quarter.
Heartland continues to support and consultant businesses in the communities throughout Florida and the United States. If you have questions or looking for more information, I would be happy to offer an overview to you and your business…Cheers!
For more information regarding the Employee Retention Credit make sure to contact
Randy Pumputis
Payroll/HR Hospitality Professional
Member of Today’s Restaurant News Networking Group
Proudly Endorsed by the FRLA
1-585-622-2993
To read more industry related articles be sure to visit www.trnusa.com to read the December issue.
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