The Employee Retention Tax Credit (ERTC or ERC) is a valuable program for businesses that have been affected by the COVID-19 pandemic. The program, which was established as part of the CARES Act, provides a credit of up to $26,000 per employee for businesses that have experienced a significant decline in revenue or have been forced to fully or partially shut down.
One of the key aspects to understand when applying for the ERTC is the concept of qualified wages. Qualified wages are those paid to employees during the eligibility period and include health insurance costs. In order to determine the eligibility period, there are three different ways to qualify:
- The amount of time a business or organization was suspended as per government orders.
- For 2020, a quarter when the gross receipts were 50% less compared to that in 2019.
- For 2021, a quarter when the gross receipts were 20% less compared to that in 2019.
It is important for business owners to understand that they must meet certain eligibility requirements in order to qualify for the ERTC. These include:
- The business experienced a total or partial shutdown (including being limited by commerce, restricted group meetings, or inability to travel)
- Or a huge decline in gross receipts (a business may be considered eligible for one quarter but not another).
It is also important to note that the ERC is available to both for-profit and nonprofit organizations. This means that non-profit organizations that have been affected by the pandemic can also take advantage of the program and use the credit to support their operations and employees.
The ERC incentivizes employee retention. By providing a credit for wages paid, the program helps businesses who kept their employees on the payroll and maintained continuity of operations during the pandemic. This can be especially important for businesses that were struggling to survive during the pandemic and may otherwise have been forced to lay off employees. This credit can also be applied now since we are entering a recession and can be utilized to keep businesses afloat in potentially rough times ahead.
One of the challenges for businesses wanting to apply for the credit is navigating the complex rules and regulations of the ERTC program. That’s where ERC Opportunities comes in. ERC Opportunities is a professional service provider that specializes in helping businesses navigate the ERTC program and claim the credit they are entitled to. Our team of experts has a deep understanding of the program and can help businesses determine their eligibility and calculate their credit amount..
The Employee Retention Tax Credit (ERTC or ERC) is a valuable program for businesses that have been affected by the COVID-19 pandemic. The program provides businesses with the opportunity to save costs, support employees, have flexibility in use, claim it easily, be available to a wide range of businesses, including non-profits, and encourage employee retention. Business owners should focus on understanding the concept of qualified wages, the different ways to qualify for the program, and the eligibility requirements to apply for the ERTC and take advantage of the benefits it offers. If you need help navigating the ERC program contact ERC Opportunities today!