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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.
Solutions provided can include:
Committed specialists that will certainly analyze highly complex program regulations and will certainly be offered to address your questions, including:
What period does the program cover?
Clay NY Employee Retention Qualifications
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.
Just how It Works
Even if you don't own a business, be sure to share this video with company owners you understand, this video could actually be worth 10s of thousands of dollars for them. And if you are a service owner and after you watch this video you want to talk with me and a member of my group, 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 service and your ballpark year-over-year profits, and let's see if we can get some more money back in your pocket because you can take this credit against your payroll taxes you pay by minimizing your required employment tax deposits or you can request an advance payment of the credit using IRS Form 7200, Advance Payment of Employer Credits Due to COVID-19.
I am not going to get into the complexities of that type here or the Form 941 and all the payroll things because that's the things your CPA should worry about. In this video I desire to inform you what you need to understand so you can go to your CPA and state, "Hey, what about this employee retention credit, why have not you informed me about this?" You can be notified and take ownership of your own tax circumstances, of your organization's tax circumstance to create more money flow in your business and more wealth for yourself.
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About Employee Retention Qualifications
Alright, now let's go 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 wish to state that absolutely nothing in this video is to be taken as legal or tax suggestions, this video is for general informational purposes only, yes, I am a CPA and a tax expert, however I am not your CPA nor your tax professional unless you have engaged my firm as such. Another disclaimer here, for purposes of this video I am assuming that if you're seeing this you are a small company owner, which for employee retention credit functions means one hundred or fewer employees for functions of the 2020 credit and five hundred or fewer staff members for functions of the 2021 credit, if you have a business with over 5 hundred employees I picture you have in-house counsel, in-house CPAs who are on top of this stuff, but I'm here for you small company owners who might work with a local tax expert who is so neck-deep in income tax return today since the federal government extended the tax due date to May 17 or volume is just the nature of their company that your tax expert hasn't had the time to go into the weeds here like I have.
Employee retention credit, why is it so lucrative for company owners in 2021 and why weren't we talking about it in 2020, it's been around given that then, considering that the CARES Act? Yes, the employee retention credit has actually been around because the CARES Act that was passed over a year ago in March 2020, however the employee retention credit didn't get much love last year in 2020 due to the fact that of the PPP, the Paycheck Protection Program.
Generally the employee retention credit had a glow-up between 2020 and 2021, it went from the unpopular woman with thick glasses and neglected eyebrows and her hair up in 2020 to the belle of the ball for business owners in 2021. Why is the employee retention credit more attractive now thanks to the Consolidated Appropriations Act and the American Rescue Plan Act?
Why Employee Retention Qualifications
Factor, the employee retention credit for both 2020 and 2021 is now readily available to PPP receivers, but of course you can't double dip. You can't get PPP for the hundred thousand dollars you paid your employees and then turn around and claim the employee retention credit on those wages. If you got PPP and you are qualified for the employee retention credit, then when you do your PPP forgiveness application, you need to pick the best covered period that will get you full PPP forgiveness however also optimize your employee retention credit.
For PPP forgiveness, you desire to fill up that payroll bucket with as numerous costs as possible that do not count for employee retention credit purposes. For example, you can't claim the employee retention credit on state unemployment insurance contributions, however state unemployment insurance coverage contributions count toward PPP forgiveness, see? You 'd desire to dispose all your state joblessness insurance coverage contributions on your PPP forgiveness application to leave as much common wages as possible to take the employee retention credit on.
Another thing to note is you can't subtract the earnings you claimed the employee retention credit on, and that makes sense as well, why should the government provide you a reduction for these salaries that they currently offered you a credit for? Alright, sorry for getting a little sidetracked there, I just like talking about this things, however let's talk about another reason why the employee retention credit is more attractive now than it was last year, and that is that it's simpler to qualify for the employee retention credit in 2021.
However in 2021, for a quarter to receive the employee retention credit, you only need to reveal a 20% decline in gross invoices compared to the exact same calendar quarter in 2019. This implies far more businesses will qualify. My service, for instance, experienced a 26% decrease in gross receipts, comparing Q1 2019 to Q1 2021, and it was a similar story in 2015 too.
So I didn't certify for the 2020 employee retention credit first, because I got preliminary of PPP money and 2nd due to the fact that my organization didn't suffer that big 50% decrease required to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my organization qualifies. Likewise, for 2021, for any quarter, you can choose to utilize the lookback quarter, indicating that, for example, even if your Q1 2021 gross invoices aren't a minimum of 20% lower than your Q1 2019 gross invoices, you can compare for purposes of figuring out eligibility for the employee retention credit for Q1 2021, you can compare Q4 2020 to Q4 2019. Implication here is that if you receive Q1 2021 based on Q1 2021's gross invoices, you will also get approved for Q2 2021 considering that you qualified in the lookback quarter of Q1 2021.
Exact same thing for Q2 to Q3 and Q3 to Q4, so essentially if you just receive Q1 and Q3 2021, you also receive Q2 and Q4 based upon the lookback. Likewise, even if you didn't have an enough decline in income, you can get approved for the employee retention credit if you were required to completely or partially suspend operations in your business throughout any calendar quarter in 2020 or 2021 due to state or federal orders, in which case you are eligible for the employee retention credit during that period of partial or full shutdown.
Typical example, you own a restaurant, and your guv signed an executive order mentioning that you need to shut down indoor dining. That is an example of a partial shutdown. Not just are more businesses eligible for the employee retention credit thanks to these brand-new laws, making PPP receivers eligible for the employee retention credit though not on the very same salaries and making more services eligible through the 20% decrease threshold rather than the 50% decrease limit, but the 2021 credit is also more profitable than the 2020 credit.
This is since for 2020, the employee retention credit amounted to 50% of all certified incomes for 2020, the employee retention credit amounted to 50% of all certified wages you paid workers in between March 12, 2020, and December 31, 2020, with a limitation of $10,000 in salaries for that whole time period. So the maximum 2020 credit per employee was $5,000. Okay, however that's nothing compared to the 2021 credit since for 2021, the credit amounts to 70% of qualified salaries per staff member paid from January 1, 2021 through December 31, 2021, limited to $10,000 in earnings per worker ... for that whole period? No. Per quarter. So for 2021 the portion is more (70% in 2021 vs. 50% in 2020) and you can take it on approximately $10,000 in incomes per worker per quarter, so we're speaking about a maximum credit of $7,000 per worker per quarter. $7,000 times 4 is $28,000 if you're eligible all four quarters. That's right, folks, the optimum 2021 employee retention credit is $28,000 per employee. That's big. That's a godsend to lots of entrepreneur today. You see what I mean now, right, how the employee retention credit has gone from unsightly duckling in 2020 to lovely swan in 2021? And by the way, by the way, qualified incomes consists of employer-paid medical insurance premiums.
If you got PPP and you are qualified for the employee retention credit, then when you do your PPP forgiveness application, you need to choose the finest covered duration that will get you complete PPP forgiveness however also maximize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I just enjoy talking about this stuff, but 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 much easier to qualify for the employee retention credit in 2021. I didn't qualify for the 2020 employee retention credit first, due to the fact that I got first round of PPP cash and 2nd since my organization didn't suffer that large 50% decline required to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my service certifies. Not just are more businesses eligible for the employee retention credit thanks to these brand-new laws, making PPP recipients eligible for the employee retention credit though not on the same wages and making more businesses eligible through the 20% decrease limit rather than the 50% decline limit, however the 2021 credit is likewise more financially rewarding than the 2020 credit.
Not bad, but that's absolutely nothing compared to the 2021 credit because for 2021, the credit is equal to 70% of qualified salaries per employee paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in salaries per worker ... for that entire time duration?
Just How to Begin
The most effective method is to deal with a no-risk, contingency-based price savings business. That will certainly bargain in behalf of their clients to get the ideal prices feasible for their existing customers. They will audit old invoices for errors obtaining for their customers refunds as well as credits. They can increase the success as well as general evaluation of their customers companies.
Solutions provided can include:
Committed specialists that will certainly analyze highly complex program regulations and will certainly be offered to address your questions, including:
Exactly how does the PPP financing aspect into the ERC?
What are the differences in between the 2020 and 2021 programs and also how does it relate to your organization?
What are gathering regulations for larger, multi-state companies, as well as exactly how do I analyze multiple states executive orders?
How do part-time, Union, and also tipped staff members impact the amount of my reimbursements?
Comprehensive evaluation concerning your eligibility
Thorough analysis of your situation
Advice on the asserting procedure as well as paperwork
Particular program proficiency that a routine CPA or payroll cpu could not be well-versed in
Smooth and also rapid end-to-end process, from eligibility to asserting as well as getting reimbursements
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| Equifax Workforce Solutions https://workforce.equifax.com/solutions/employee-retention-credit |
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| NYC Business https://www1.nyc.gov/nycbusiness/article/nyc-employee-retention-grant-program |
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| Disisaster Loan Advisors https://www.disasterloanadvisors.com/ |
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Prepared To Start? Its Simple.
1. Whichever business you choose to work with will certainly establish whether your business certifies and gets approvel for the ERC.
2. They will analyze your case and also calculate the maximum quantity you can obtain.
3. Their group overviews you with the claiming process, from starting to finish, including correct paperwork.
Frequently Asked Questions (FAQs)
What period does the program cover?
The program began on March 13th, 2020 as well as ends on September 30, 2021, for eligible employers.
You can obtain refunds for 2020 and also 2021 after December 31st of this year, right into 2022 as well as 2023. As well as potentially past after that as well.
Many businesses have received reimbursements, as well as others, along with reimbursements, likewise qualified to continue receiving ERC in every pay-roll they process through December 31, 2021, at about 30% of their payroll cost.
Some services have actually received refunds from $100,000 to $6 million.
Do we still qualify if we currently took the PPP?
Yes. Under the Consolidated Appropriations Act, businesses can now get the ERC even if they currently obtained a PPP financing. Keep in mind, though, that the ERC will just relate to salaries not utilized for the PPP.
Do we still certify if we did not) sustain a 20% decline in gross invoices .
A government authority required complete or partial closure of your service throughout 2020 or 2021. This includes your procedures being restricted by business, lack of ability to travel or constraints of group conferences.
- Gross invoice decrease criteria is different for 2020 and also 2021, yet is determined against the current quarter as compared to 2019 pre-COVID amounts:
- A federal government authority needed partial or full shutdown of your business throughout 2020 or 2021. This includes your operations being restricted by commerce, inability to take a trip or constraints of group conferences.
- Gross receipt decrease criteria is various for 2020 as well as 2021, but is measured against the present quarter as compared to 2019 pre-COVID amounts.
Do we still qualify if we remained open during the pandemic?
Yes. To certify, your business must meet either one of the complying with criteria:
- Experienced a decrease in gross receipts by 20%, or
- Needed to alter company procedures due to federal government orders
Lots of items are considered as adjustments in company procedures, consisting of shifts in job functions and also the purchase of added safety equipment.