Raise your hand if you received a PPP loan last year.
Quite a few of you likely took advantage of that opportunity.
If that loan happened to be enough to cover all your employee wages for last year, then well done. I hope that has given you a great head start on growing your business this year.
For some of you it probably wasn’t quite enough but, you’re in luck. You have options to help with recouping some of that money.
That help comes in the form of the Employee Retention Credit or ERC.
This is an opportunity to keep your employees on the payroll. That’s usually the highest expense for any business, so getting that covered if you were hit especially hard by the pandemic, then definitely take advantage of the ERC.
Here’s how it works.
If you have wages that were not paid with the PPP loan, there’s still a chance you can take the employee retention credit. Forgiven PPP loan proceeds may not have been enough to cover all that year’s wages.
The ERC can be claimed retroactively for those excess wages paid in 2020.
If claiming the credit retroactively isn’t an option for whatever reason for you, it can be claimed for wages paid in the 1st or 2nd quarter of 2021.
The credit was designed for employers to keep employees on their payroll.
Business’ of all sizes have the credit available to them, but…
You must qualify with one of two tests that are calculated each calendar quarter.
- Your business is fully or partially suspended by government order due to the pandemic during the calendar quarter, or
- Your gross income is below 50% (20% for 2021) of the comparable quarter in 2019.
For example, if you are a Gym owner – you were forced to shut down. You would 100% qualify for this credit.
Take advantage of this opportunity.
We want every business to thrive and this just might be what you need to keep the doors open.
The claim has to go through your payroll processor. Have them file an amended 4Q 2020 or let them know you are eligible for 2021.
Schedule Time with a Professional if you have any questions.
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