Can I still obtain the employee retention credit?

The Employee Retention Credit (ERC) is just a new tax credit created in response to the economic downturn caused by COVID-19. This tax credit aims to greatly help businesses keep their staff on their payrolls over these difficult times. Here's the thing you need to know about applying for the employee retention tax credit.

Qualifying Requirements

In order to qualify for the employee retention credit, your business must meet certain criteria. First, your business must have had operations that were either fully or partially suspended due to government orders related to COVID-19. Alternatively, your organization must have experienced a 50% decline in gross receipts when compared with the exact same quarter of 2019. In addition, the ERC applies only to those businesses who employ fewer than 500 full-time employees.

Calculating Credits

The amount of credit available varies depending on what many employees you've and whether your business was fully or partially suspended because of government orders related to COVID-19. For businesses that were fully suspended, you will find no limitations on the quantity of money that may be claimed as a credit for every employee; however, for businesses which were only partially suspended due to government orders related to COVID-19, there's a top limit of $5,000 per employee per calendar quarter. Additionally, employers are entitled to credits up to and including maximum of $7,000 per employee over all quarters in 2020 and 2021 combined. The total quantity of ERC credits allowed is limited by wages paid after March 12th and before January 1st of 2021.

Conclusion: Applying for the Employee Retention Credit is an excellent way for businesses affected by COVID-19 restrictions or closures to have some essential financial relief while still being able to retain their staff on the payrolls during these difficult times. However, it's essential for business owners and HR professionals alike to know the requirements and calculations necessary in order to apply with this tax credit successfully to allow them to maximize their savings. With this information in hand, you will end up ready when applying for the ERC!