Why Employee Retention Specialists

Very first reason, the employee retention credit for both 2020 and 2021 is now offered to PPP recipients, but 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. The government does not look too fondly on paying your payroll for you through the PPP and after that you claiming a credit versus the taxes you pay the government on those earnings that the government paid for you. That makes sense. Now, there's some preparation here. 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 very best covered period that will get you complete PPP forgiveness but also maximize your employee retention credit.



Likewise, for PPP forgiveness, you wish to fill that payroll pail with as numerous expenses as possible that don't count for employee retention credit functions. For instance, you can't claim the employee retention credit on state unemployment insurance coverage contributions, but state unemployment insurance coverage contributions count toward PPP forgiveness, see? You 'd desire to dump all your state joblessness insurance contributions on your PPP forgiveness application to leave as much common wages as possible to take the employee retention credit on.

This can get really technical very fast and it's really circumstance particular in terms of enhancing 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, but just understand that you truly have to do the mathematics 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 subtract the earnings you declared the employee retention credit on, and that makes good sense also, why should the federal government give you a deduction for these wages that they already offered you a credit for? So basically the credit is tax-effected. Alright, sorry for getting a little sidetracked there, I just love discussing this stuff, however let's speak about another reason that the employee retention credit is more attractive now than it was last year, and that is that it's simpler to certify for the employee retention credit in 2021. In 2020, for a quarter to receive the employee retention credit, you needed to show a 50% decrease in gross receipts compared to the very same calendar quarter in 2019.

However in 2021, for a quarter to get approved for the employee retention credit, you only need to show a 20% reduction in gross invoices compared to the exact same calendar quarter in 2019. So this means even more businesses will certify. My service, for instance, experienced a 26% decline in gross receipts, comparing Q1 2019 to Q1 2021, and it was a similar story last year too.

I didn't certify for the 2020 employee retention credit first, because I got first round of PPP money and 2nd due to the fact that my company didn't suffer that big 50% decrease needed to qualify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my business qualifies. For 2021, for any quarter, you can elect to utilize the lookback quarter, indicating that, for example, even if your Q1 2021 gross invoices 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 receive Q1 2021 based on Q1 2021's gross receipts, you will likewise certify for Q2 2021 given that you qualified in the lookback quarter of Q1 2021.

Very same thing for Q2 to Q3 and Q3 to Q4, so essentially if you just receive Q1 and Q3 2021, you also certify for Q2 and Q4 based on the lookback. Likewise, even if you didn't have an adequate decline in earnings, you can receive the employee retention credit if you were required to totally or partially suspend operations in your company 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.

Typical example, you own a restaurant, and your governor signed an executive order stating that you need to shut down indoor dining. That is an example of a partial shutdown. Likewise, not only are more companies qualified for the employee retention credit thanks to these new laws, making PPP receivers eligible for the employee retention credit though not on the same earnings and making more services eligible through the 20% decline threshold rather than the 50% decrease threshold, but the 2021 credit is also more financially rewarding than the 2020 credit.

This is due to the fact that for 2020, the employee retention credit amounted to 50% of all qualified salaries for 2020, the employee retention credit amounted to 50% of all certified incomes you paid staff members between March 12, 2020, and December 31, 2020, with a limitation of $10,000 in wages for that entire period. So the maximum 2020 credit per worker was $5,000. Not bad, however that's absolutely nothing compared to the 2021 credit since for 2021, the credit amounts to 70% of certified earnings per employee paid from January 1, 2021 through December 31, 2021, limited to $10,000 in incomes per worker ... for that whole period? No. Per quarter. For 2021 the percentage is more (70% in 2021 vs. 50% in 2020) and you can take it on up to $10,000 in incomes per employee per quarter, so we're talking about an optimum credit of $7,000 per staff member per quarter. If you're eligible all 4 quarters, $7,000 times four is $28,000. That's right, folks, the maximum 2021 employee retention credit is $28,000 per worker. That's huge. That's a godsend to many entrepreneur today. So you see what I indicate now, right, how the employee retention credit has gone from awful duckling in 2020 to stunning swan in 2021, right? And by the method, by the method, qualified earnings consists of employer-paid health insurance coverage premiums.


If you got PPP and you are eligible for the employee retention credit, then when you do your PPP forgiveness application, you require to choose the best covered period that will get you complete PPP forgiveness but also optimize your employee retention credit.



Alright, sorry for getting a little sidetracked there, I simply enjoy 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 qualify for the 2020 employee retention credit initially, since I got first round of PPP money and second due to the fact that my service didn't suffer that large 50% decrease required to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my company certifies. Not just are more organizations eligible for the employee retention credit thanks to these brand-new laws, making PPP receivers qualified for the employee retention credit though not on the very same wages and making more services eligible through the 20% decrease threshold rather than the 50% decrease limit, however the 2021 credit is likewise more financially rewarding than the 2020 credit.

Not bad, but that's nothing compared to the 2021 credit because for 2021, the credit is equal to 70% of certified incomes per staff member paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in incomes per employee ... for that entire time duration?