EMPLOYEE RETENTION CREDIT

What is the ERTC?

The Employee Retention Tax Credit (ERTC) is a payroll tax refund from the United States Treasury Department applicable to businesses who kept employees on payroll during the pandemic.

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 Tax Credit (ERTC), specifically added to help businesses like yours.

What is the ERTC?

The Employee Retention Tax Credit (ERTC)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.

Is my business eligible for the ERTC?

Most small and medium-sized businesses qualify. Many business owners are disqualifying themselves based on outdated information, sometimes from their own CPA.

The ERTC is related to your payroll, not your business income tax returns, which is what most CPAs handle. Meaning, this credit has mostly fallen into an area where few CPAs are able to effectively process it.

Additionally, ERTC qualifications and limitations have been amended by Congress many times since the initial rollout of the Employee Retention Credit. With over 200 pages of complex ERTC tax code, it’s no wonder that not every CPA fully understands the program. We recommend working with an ERTC specialist that can provide you with updated information and help you get the full refund amounts that you deserve.

Eligibility Requirements

You must have a “small business.”

The government has defined “small business” as:

Any employer that operates a trade, business, or a tax-exempt organization. This was expanded for the ERTC 2021 to include some governmental employers.
Having fewer than 100 full-time employees (calculated from 2019) for the 2020 ERC refund.
Having fewer than 500 full-time employees (calculated from 2019) for the 2021 ERTC refund.

Your small business is eligible for an ERTC refund if it meets either of the following criteria:

Experienced a significant decline in gross receipts of 20% for 2021; 50% for 2020 per calendar quarter compared to the same quarter of 2019.

OR

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 by one or more of the following, you 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.
Your business was partially or fully shut down due to a government order.