The CARES Act provides relief for individuals and companies affected by COVID-19. When the act was passed, employers received an incentive to keep their employees on the payroll.
If you’re considering this credit and what it means for your business, make sure that you also learn how it works for your relatives.
Here are some points that you should know about the employee retention credit and how it applies to your family members.
Understand the Employee Retention Credit
If you’re going to apply for the employee retention credit, make sure you learn how it works first.
This is a credit that is in place to help companies that had to shut down during COVID closures. It’s also available for companies that endured a large drop in revenue during this time. You can claim this credit if you had employees during 2020 and Q1-Q3 of 2021.
Companies that are eligible for the credit can receive it for their portion of Social Security and employment tax. They can receive it after filing and acceptance, rather than having to wait to file their tax returns.
It’s also refundable, which means that the company can receive money for any overpayment.
How Does This Affect Family Members?
Understanding how this retention credit works also means considering family members.
The government explains that wages of people related to the owner are not eligible for the credit. It goes on to list relatives that aren’t eligible, including children, siblings, parents, or any ancestors of the owner’s parents.
If the business is a corporation, then the wages of any majority owner’s relative would be ineligible. The same applies to small businesses and relatives of any individual who owns more than 50% of profits and capital.
How Can You Claim the Credit?
These incentives are in place so that businesses keep people on their payroll and at work. Knowing how to claim the credit will expedite the process so that you’re steps away from getting the relief that you need.
First, research the varying details that determine your eligibility. There are several circumstances that can apply, such as:
- If your municipality enforced shutdowns or partial shutdowns that closed or limited your business
- A significant drop in revenue or sales
- Mandates issued by your municipality
- The owner started the business between Feb. 15, 2020 and Dec. 31, 2021
Seek guidance on the credit so that you know for sure whether you’re eligible. A counselor can advise you on how to proceed and can process your application and facilitate the payment.
Handle Your Payroll Issues
These tips will help you figure out the employee retention credit and how it fits your business. Since 2020 arrived, businesses and consumers have had to remain adaptive to changes that are shaking the entire world.
The better you handle your payroll issues, the easier time you will have to keep your company afloat during difficult and uncertain times.
By understanding the information above you can take advantage of relief that might be available to you. We’re also happy to help.
To learn more about ERC Opportunities or to apply, use our form, or call us at (984) 664-2004.