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Alright, everybody, so the SBA this week came out and said that it has stopped accepting new PPP applications from most lenders. The SBA informed lenders this past Tuesday that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which are institutions that specifically work with businesses in underserved communities. But all is not lost, dear small business owners of America. If you missed out on the PPP or if you did not qualify for the PPP, don't lose hope because you may still qualify for the employee retention credit on all those wages you didn't claim for PPP forgiveness, and this employee retention credit could be worth up to $28,000 per employee. And yes, even if you got PPP money, you can still get a piece of this employee retention credit cake.
Assistance supplied can include:
Committed experts that will interpret extremely complicated program rules and will certainly be readily available to answer your inquiries, including:
What duration does the program cover?
Albany NY Employee Retention Credit Application
Alright, everybody, so the SBA this week came out and said that it has stopped accepting new PPP applications from most lenders. The SBA informed lenders this past Tuesday that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which are institutions that specifically work with businesses in underserved communities. But all is not lost, dear small business owners of America. If you missed out on the PPP or if you did not qualify for the PPP, don't lose hope because you may still qualify for the employee retention credit on all those wages you didn't claim for PPP forgiveness, and this employee retention credit could be worth up to $28,000 per employee. And yes, even if you got PPP money, you can still get a piece of this employee retention credit cake.
Exactly How It Functions
Even if you don't own a service, be sure to share this video with service owners you know, this video might actually be worth 10s of thousands of dollars for them. And if you are a company owner and after you watch this video you want to talk with me and a member of my team, who will also be either a CPA like myself or an EA, shoot me an e-mail, [email protected], tell me a little about your organization and your ballpark year-over-year earnings, and let's see if we can get some more cash back in your pocket since you can take this credit versus your payroll taxes you pay by lowering your required employment tax deposits or you can request an advance payment of the credit utilizing IRS Form 7200, Advance Payment of Employer Credits Due to COVID-19.
I am not going to get into the complexities of that form here or the Form 941 and all the payroll stuff because that's the stuff your CPA should stress over. In this video I wish to tell you what you require to know so you can go to your CPA and state, "Hey, what about this employee retention credit, why haven't you informed me about this?" so you can be notified and take ownership of your own tax scenarios, of your company's tax scenario to create more cash circulation in your service and more wealth on your own.
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About Employee Retention Credit Application
Alright, now let's dig into this and let's speak about the employee retention credit or the ERC as some folks like to call it, prior to I get into this, I want to say that nothing in this video is to be taken as legal or tax recommendations, this video is for basic informational functions only, yes, I am a tax and a cpa professional, but I am not your CPA nor your tax professional unless you have actually engaged my firm as such. Another disclaimer here, for purposes of this video I am presuming that if you're watching this you are a little company owner, which for employee retention credit functions implies one hundred or less workers for functions of the 2020 credit and 5 hundred or fewer employees for purposes of the 2021 credit, if you have a company with over 5 hundred employees I envision you have in-house counsel, in-house CPAs who are on top of this stuff, but I'm here for you small organization owners who might work with a local tax professional who is so neck-deep in tax returns right now because the government extended the tax deadline to May 17 or volume is simply the nature of their organization that your tax specialist hasn't had the time to go into the weeds here like I have.
Employee retention credit, why is it so lucrative for business owners in 2021 and why weren't we talking about it in 2020, it's been around because then, considering that the CARES Act? Yes, the employee retention credit has actually been around since the CARES Act that was passed over a year ago in March 2020, but the employee retention credit didn't get much love last year in 2020 since of the PPP, the Paycheck Protection Program.
Basically the employee retention credit had a glow-up in between 2020 and 2021, it went from the nerdy girl with unkempt eyebrows and thick glasses and her hair up in 2020 to the belle of the ball for organization owners in 2021. Why is the employee retention credit more appealing now thanks to the Consolidated Appropriations Act and the American Rescue Plan Act?
Why Employee Retention Credit Application
Factor, the employee retention credit for both 2020 and 2021 is now available to PPP recipients, however of course you can't double dip. You can't get PPP for the hundred thousand dollars you paid your staff members and then turn around and claim the employee retention credit on those incomes. If you got PPP and you are qualified for the employee retention credit, then when you do your PPP forgiveness application, you need to select the best covered duration that will get you complete PPP forgiveness but also maximize your employee retention credit.
For PPP forgiveness, you desire to fill up that payroll pail with as lots of costs as possible that don't count for employee retention credit purposes. For instance, you can't declare the employee retention credit on state joblessness insurance coverage contributions, however state joblessness insurance coverage contributions count toward PPP forgiveness, see? So you 'd want to dispose all your state unemployment insurance contributions on your PPP forgiveness application to leave as much ordinary salaries as possible to take the employee retention credit on.
This can get really technical extremely quick and it's very situation particular in terms of optimizing PPP vs. ERC and my company has tools to figure this stuff out for you, I'm not going to dig into all that here, however just know that you really have to do the math when doing your PPP forgiveness to make sure you're not leaving anything on the table in terms of the employee retention credit. Another thing to note is you can't deduct the incomes you declared the employee retention credit on, which makes good sense too, why should the government give you a deduction for these wages that they already provided you a credit for? So essentially the credit is tax-effected. Alright, sorry for getting a little sidetracked there, I just love talking about this stuff, however let's discuss another reason that the employee retention credit is more attractive now than it was last year, which is that it's easier to receive the employee retention credit in 2021. In 2020, for a quarter to receive the employee retention credit, you had to show a 50% reduction in gross receipts compared to the exact same calendar quarter in 2019.
But in 2021, for a quarter to certify for the employee retention credit, you only need to show a 20% reduction in gross invoices compared to the same calendar quarter in 2019. So this indicates even more companies will certify. My organization, for example, experienced a 26% decline in gross invoices, comparing Q1 2019 to Q1 2021, and it was a similar story in 2015 too.
I didn't qualify for the 2020 employee retention credit first, because I got very first round of PPP cash and second since my business didn't suffer that large 50% decline needed to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my business certifies. For 2021, for any quarter, you can choose to use the lookback quarter, meaning that, for example, even if your Q1 2021 gross receipts aren't at least 20% lower than your Q1 2019 gross receipts, you can compare for functions of identifying eligibility for the employee retention credit for Q1 2021, you can compare Q4 2020 to Q4 2019. Implication here is that if you get approved for Q1 2021 based on Q1 2021's gross receipts, you will likewise receive Q2 2021 given that you certified in the lookback quarter of Q1 2021.
Same thing for Q2 to Q3 and Q3 to Q4, so essentially if you just get approved for Q1 and Q3 2021, you likewise get approved for Q2 and Q4 based on the lookback. Even if you didn't have an enough decrease in income, you can qualify for the employee retention credit if you were required to completely or partly suspend operations in your service during any calendar quarter in 2020 or 2021 due to state or federal orders, in which case you are qualified for the employee retention credit throughout that period of full or partial shutdown.
Common example, you own a restaurant, and your governor signed an executive order mentioning that you require to close down indoor dining. That is an example of a partial shutdown. Not only are more businesses eligible for the employee retention credit thanks to these brand-new laws, making PPP recipients qualified for the employee retention credit though not on the same earnings and making more companies eligible through the 20% decrease threshold rather than the 50% decrease threshold, however the 2021 credit is likewise more rewarding than the 2020 credit.
Not bad, however that's nothing compared to the 2021 credit because for 2021, the credit is equal to 70% of certified wages per worker paid from January 1, 2021 through December 31, 2021, limited to $10,000 in wages per worker ... for that whole time period? For 2021 the percentage is more (70% in 2021 vs. 50% in 2020) and you can take it on up to $10,000 in earnings per employee per quarter, so we're talking about a maximum credit of $7,000 per staff member per quarter. That's right, folks, the optimum 2021 employee retention credit is $28,000 per employee.
If you got PPP and you are eligible for the employee retention credit, then when you do your PPP forgiveness application, you need to pick the finest covered period that will get you full PPP forgiveness but likewise optimize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I just love talking about this things, however let's talk about another reason why the employee retention credit is more appealing now than it was last year, and that is that it's easier to qualify for the employee retention credit in 2021. I didn't certify for the 2020 employee retention credit initially, since I got very first round of PPP money and second because my organization didn't suffer that big 50% decrease required to qualify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my organization certifies. Not only are more companies eligible for the employee retention credit thanks to these brand-new laws, making PPP recipients qualified for the employee retention credit though not on the exact same earnings and making more organizations eligible through the 20% decrease limit rather than the 50% decrease threshold, but the 2021 credit is likewise more profitable than the 2020 credit.
Not bad, however that's absolutely nothing compared to the 2021 credit due to the fact that for 2021, the credit is equivalent to 70% of qualified earnings per employee paid from January 1, 2021 through December 31, 2021, limited to $10,000 in incomes per worker ... for that entire time duration?
Exactly How to Start
That will certainly discuss on behalf of their clients to obtain the ideal rates possible for their existing clients. They will certainly examine old invoices for errors getting their clients refunds as well as tax credits.
Assistance supplied can include:
Committed experts that will interpret extremely complicated program rules and will certainly be readily available to answer your inquiries, including:
Exactly how does the PPP loan aspect into the ERC?
What are the distinctions in between the 2020 as well as 2021 programs as well as just how does it apply to your company?
What are gathering guidelines for bigger, multi-state companies, and also just how do I interpret several states executive orders?
Just how do part-time, Union, and also tipped staff members affect the quantity of my reimbursements?
Thorough evaluation regarding your eligibility
Extensive evaluation of your situation
Guidance on the claiming procedure and paperwork
Particular program experience that a regular CPA or pay-roll processor may not be well-versed in
Smooth as well as fast end-to-end process, from eligibility to declaring as well as receiving reimbursements
| Adams Brown Strategic Allies and CPAs https://www.adamsbrowncpa.com/ertc-tax-credit-consulting-new-york/ |
| Finance Pro Plus https://www.financeproplus.com/ |
| Bottom Line Concepts https://erc.bottomlinesavings.com/ |
| Equifax Workforce Solutions https://workforce.equifax.com/solutions/employee-retention-credit |
| Valiant Capital https://erc.valiant-capital.com/ |
| NYC Business https://www1.nyc.gov/nycbusiness/article/nyc-employee-retention-grant-program |
| Omega Funding solutions https://www.omegafundingsolutions.com/ |
| Disisaster Loan Advisors https://www.disasterloanadvisors.com/ |
| ERTC Filing https://info.ertcfiling.com/employee-retention-tax-credit-new-york-11368/ |
All Set To Begin? Its Simple.
1. Whichever firm you select to work with will certainly establish whether your company certifies for the ERC.
2. They will certainly assess your case and compute the optimum amount you can get.
3. Their group guides you with the asserting procedure, from starting to end, consisting of appropriate documentation.
Frequently Asked Questions (FAQs)
What duration does the program cover?
The program began on March 13th, 2020 and also right on September 30, 2021, for eligible employers.
You can look for reimbursements for 2020 as well as 2021 after December 31st of this year, right into 2022 and 2023. And potentially beyond then also.
Many companies have received refunds, as well as others, along with refunds, likewise certified to proceed getting ERC in every pay-roll they refine to December 31, 2021, at around 30% of their pay-roll cost.
Some companies have obtained refunds from $100,000 to $6 million.
Do we still certify if we currently took the PPP?
Yes. Under the Consolidated Appropriations Act, services can currently receive the ERC also if they already got a PPP financing. Keep in mind, however, that the ERC will only apply to wages not used for the PPP.
Do we still accredit if we did not incur a 20% decline in gross billings .
A government authority called for complete or partial closure of your organization throughout 2020 or 2021. This includes your procedures being limited by business, inability to travel or limitations of group conferences.
- Gross invoice reduction requirements is different for 2020 and also 2021, but is measured against the current quarter as compared to 2019 pre-COVID amounts:
- A federal government authority required full or partial closure of your company during 2020 or 2021. This includes your operations being restricted by business, failure to take a trip or constraints of team conferences.
- Gross invoice decrease requirements is different for 2020 and also 2021, but is gauged versus the existing quarter as contrasted to 2019 pre-COVID amounts.
Do we still qualify if we continued to be open throughout the pandemic?
Yes. To qualify, your organization must satisfy either among the following standards:
- Experienced a decline in gross receipts by 20%, or
- Had to change service operations because of federal government orders
Many items are considered as adjustments in business operations, including shifts in work functions and also the acquisition of added safety equipment.