In this video, we dive into the details of the Employee Retention Credit (ERC) and discuss why it’s been generating so much buzz among business owners. Many clients have been reaching out to me, asking if they qualify for this credit, and today, I’ll provide the answers you need!
The ERC is an incredible opportunity for business owners to receive substantial tax credits. Some companies are aggressively promoting it, enticing you with the allure of $26,000 per employee. However, there’s more to it than meets the eye.
Join me as we delve into the fine print and understand what this credit is all about. The government initiated the ERC as a response to the COVID-19 pandemic, aiming to incentivize businesses to retain their employees during these challenging times. If you kept your employees on the job and met specific criteria, the government wants to show its appreciation by refunding a portion of the salaries you paid.
But who exactly qualifies for this credit? It’s important to note that as a business owner or partner, you don’t count. You must have legitimate employees, not independent contractors. Your employees should be on payroll, receiving wages through W-2 forms, and subject to payroll taxes.
Now, let’s explore the eligibility criteria based on when your business started. If your business existed before February 12th, 2020, you may qualify for the credit if you either experienced a significant drop in income or were mandated to shut down by the government. In 2020, the credit amounted to 50% of wages and benefits paid, up to $10,000 per employee. This means you could potentially receive up to $5,000 per employee for wages paid between March and December.
For 2021, the rules changed. The credit increased to 70% on the first $10,000 you paid to each employee per quarter. This applies to the first three quarters of the year, allowing you to potentially get back up to $21,000 per employee. When combined with the $5,000 credit from 2020, it results in the widely talked-about $26,000 figure.
However, be cautious! While claiming the ERC may seem simple, just like with the PPP loans, fraudulent activities can have severe consequences. The forms are relatively straightforward, but it’s crucial to ensure that your business genuinely qualifies for the credit. Don’t be swayed by the promise of easy money without meeting the necessary requirements. Otherwise, you could face complications down the line..
Stay informed and equipped with the knowledge necessary to navigate the ERC landscape confidently. Watch this video to gain a better understanding of the credit and avoid falling into potential pitfalls.
Make sure to subscribe for more valuable insights, and I’ll catch you in the next one!
