
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
This is big, a lot of small company owners don't learn about this, or they've heard about it, but they do not know much about it, even numerous tax professionals don't understand the ins and outs of this thing because it's new and a lot of these changes
that are helpful to business owners took place in the middle of tax season. So in this video I'm going to go into the employee retention credit, why it's so lucrative now in 2021, more lucrative, far more profitable, in reality now than it remained in 2020, 5x more rewarding at least. Even if you do not own a company, be sure to share this video with service owners you understand, this video might actually be worth 10s of thousands of dollars for them. And if you are an organization owner and after you see this video you desire 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], inform me a little about your service and your ballpark year-over-year profits, and let's see if we can get some more cash back in your pocket due to the fact that you can take this credit versus your payroll taxes you pay by reducing your needed 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.
Since that's the stuff your CPA must fret about, I am not going to get into the intricacies of that kind here or the Form 941 and all the payroll things. In this video I want to tell you what you need 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 informed and take ownership of your own tax scenarios, of your service's tax scenario to produce more cash flow in your company and more wealth for yourself.

Related Posts
About Employee Retention Tax Credit 2021
Alright, now let's go into this and let's discuss the employee retention credit or the ERC as some folks like to call it, before I enter this, I want to state that absolutely nothing in this video is to be taken as legal or tax guidance, this video is for basic informational functions just, yes, I am a tax and a cpa professional, but 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 implies one hundred or fewer employees for purposes of the 2020 credit and five hundred or less staff members for purposes of the 2021 credit, if you have a company with over 5 hundred employees I imagine 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 tax returns today because the federal government extended the tax deadline to May 17 or volume is simply the nature of their company that your tax professional hasn't had the time to dig into the weeds here like I have.
So employee retention credit, why is it so financially rewarding for entrepreneur in 2021 and why weren't we talking about it in 2020, it's been around because then, because the CARES Act? Why is it getting all this buzz now that it wasn't last year? Well, let's back it up. 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 in 2015 in 2020 because of the PPP, the Paycheck Protection Program. Initially, in 2020, if you received a PPP loan as an employer, you were not qualified for the employee retention credit.
Generally the employee retention credit had a glow-up in between 2020 and 2021, it went from the unpopular girl with neglected eyebrows and thick glasses and her hair up in 2020 to the belle of the ball for service 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 Tax Credit 2021
Very first factor, the employee retention credit for both 2020 and 2021 is now offered to PPP recipients, however naturally you can't double dip. You can't get PPP for the hundred thousand dollars you paid your workers and then turn around and claim the employee retention credit on those earnings. The government doesn't look too fondly on paying your payroll for you through the PPP and after that you declaring a credit against the taxes you pay the government on those earnings that the federal government paid for you. That makes sense. Now, there's some planning 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 select the finest covered period that will get you full PPP forgiveness however also optimize your employee retention credit.
Likewise, for PPP forgiveness, you wish to fill that payroll container with as many costs as possible that don't count for employee retention credit functions. You can't declare the employee retention credit on state joblessness insurance contributions, but state unemployment insurance contributions count toward PPP forgiveness, see? You 'd want to dump all your state joblessness insurance contributions on your PPP forgiveness application to leave as much common salaries as possible to take the employee retention credit on.
This can get extremely technical very quickly and it's very circumstance specific in terms of enhancing PPP vs. ERC and my firm has tools to figure this things out for you, I'm not going to dig into all that here, however simply know that you actually 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 incomes you claimed the employee retention credit on, and that makes good sense as well, why should the federal government offer you a reduction for these earnings that they currently provided you a credit for? Basically the credit is tax-effected. Alright, sorry for getting a little sidetracked there, I just enjoy talking about this things, but let's speak about another reason that the employee retention credit is more attractive now than it was in 2015, which is that it's easier to receive the employee retention credit in 2021. In 2020, for a quarter to get approved for the employee retention credit, you had to reveal a 50% decline in gross invoices compared to the exact same calendar quarter in 2019.
However in 2021, for a quarter to get approved for the employee retention credit, you only require to show a 20% decrease in gross invoices compared to the exact same calendar quarter in 2019. This indicates far more services will qualify. My business, for instance, experienced a 26% decrease in gross receipts, comparing Q1 2019 to Q1 2021, and it was a similar story last year too.
So I didn't receive the 2020 employee retention credit initially, because I got preliminary of PPP cash and second since my organization didn't suffer that large 50% decrease required to get approved for the employee retention credit last year.But for 2021, at least for Q1, yeah, my organization certifies. Likewise, for 2021, for any quarter, you can choose to use the lookback quarter, indicating that, for example, even if your Q1 2021 gross receipts aren't a minimum of 20% lower than your Q1 2019 gross receipts, you can compare for functions 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 upon Q1 2021's gross receipts, you will likewise receive Q2 2021 considering that you qualified in the lookback quarter of Q1 2021.
Same thing for Q2 to Q3 and Q3 to Q4, so generally if you simply get approved for Q1 and Q3 2021, you also qualify for Q2 and Q4 based on the lookback. Also, even if you didn't have an enough decline in revenue, you can get approved for the employee retention credit if you were required to completely or partly suspend operations in your company during 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 duration of complete or partial shutdown.
Typical example, you own a dining establishment, and your guv 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 eligible for the employee retention credit thanks to these new laws, making PPP receivers qualified for the employee retention credit though not on the very same incomes and making more services eligible through the 20% decrease limit rather than the 50% decrease limit, however the 2021 credit is likewise more rewarding than the 2020 credit.
This is since for 2020, the employee retention credit amounted to 50% of all qualified earnings for 2020, the employee retention credit was equal to 50% of all qualified salaries you paid employees in between March 12, 2020, and December 31, 2020, with a limit of $10,000 in earnings for that whole period. The maximum 2020 credit per staff member was $5,000. Okay, however that's nothing compared to the 2021 credit due to the fact that for 2021, the credit amounts to 70% of qualified wages per staff member paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in wages per staff member ... for that entire time duration? No. Per quarter. So for 2021 the portion is more (70% in 2021 vs. 50% in 2020) and you can take it on up to $10,000 in earnings per staff member per quarter, so we're discussing a maximum credit of $7,000 per employee per quarter. If you're eligible all 4 quarters, $7,000 times four is $28,000. That's right, folks, the optimum 2021 employee retention credit is $28,000 per worker. That's huge. That's a godsend to lots of organization owners right now. You see what I imply now, right, how the employee retention credit has gone from ugly duckling in 2020 to gorgeous swan in 2021? And by the method, by the way, certified earnings consists of employer-paid medical insurance 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 pick the finest covered duration that will get you full PPP forgiveness however also optimize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I simply love talking about this stuff, but let's talk about another factor why the employee retention credit is more appealing now than it was last year, and that is that it's easier to certify for the employee retention credit in 2021. I didn't certify for the 2020 employee retention credit first, because I got very first round of PPP money and 2nd due to the fact that my company didn't suffer that big 50% decline required to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my business qualifies. Not only are more businesses qualified for the employee retention credit thanks to these new laws, making PPP receivers qualified for the employee retention credit though not on the same incomes and making more businesses eligible through the 20% decline limit rather than the 50% decrease threshold, however the 2021 credit is also more lucrative than the 2020 credit.
Not bad, however that's nothing compared to the 2021 credit because for 2021, the credit is equivalent to 70% of certified wages per employee paid from January 1, 2021 through December 31, 2021, limited to $10,000 in salaries per employee ... for that entire time duration?
How to Get going
That will work out on behalf of their clients to get the finest costs feasible for their existing customers. They will examine old invoices for errors getting their clients refunds as well as tax credits.
Solutions offered can include:
Devoted professionals that will interpret highly intricate program regulations and will certainly be offered to answer your inquiries, including:
How does the PPP financing element into the ERC?
What are the differences between the 2020 and 2021 programs and exactly how does it use to your organization?
What are aggregation policies for bigger, multi-state employers, as well as exactly how do I translate numerous states executive orders?
Just how do part-time, Union, as well as tipped staff members impact the quantity of my refunds?
Thorough assessment regarding your qualification
Detailed evaluation of your case
Guidance on the asserting procedure as well as paperwork
Certain program experience that a routine certified public accountant or pay-roll cpu could not be well-versed in
Smooth and quick end-to-end process, from qualification to asserting and getting 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/ |
Prepared To Begin? Its Simple.
1. Whichever company you select to work with will certainly identify whether your company qualifies for the ERC.
2. They will analyze your case and compute the optimum amount you can obtain.
3. Their team overviews you with the claiming procedure, from beginning to finish, consisting of appropriate documentation.
Frequently Asked Questions (FAQs)
What period does the program cover?
The program began on March 13th, 2020 and also ends on September 30, 2021, for eligible companies.
You can get refunds for 2020 as well as 2021 after December 31st of this year, into 2022 and 2023. And possibly beyond after that too.
Many companies have received refunds, and others, along with reimbursements, likewise qualified to proceed receiving ERC in every pay-roll they process through December 31, 2021, at close to 30% of their pay-roll cost.
Some businesses have gotten reimbursements from $100,000 to $6 million.
Do we still qualify if we already took the PPP?
Yes. Under the Consolidated Appropriations Act, services can currently receive the ERC even if they already obtained a PPP financing. Keep in mind, however, that the ERC will only put on incomes not used for the PPP.
sustain a 20% decrease in gross invoices .
A government authority called for complete or partial shutdown of your company during 2020 or 2021. This includes your procedures being limited by commerce, failure to take a trip or constraints of group meetings.
- Gross invoice decrease criteria is various for 2020 as well as 2021, yet is determined against the current quarter as contrasted to 2019 pre-COVID amounts:
- A government authority called for complete or partial closure of your company throughout 2020 or 2021. This includes your operations being restricted by commerce, failure to travel or restrictions of group meetings.
- Gross receipt reduction requirements is different for 2020 and also 2021, but is measured against the current quarter as contrasted to 2019 pre-COVID quantities.
Do we still certify if we continued to be open during the pandemic?
Yes. To certify, your service has to meet either among the following standards:
- Experienced a decline in gross receipts by 20%, or
- Had to change organization procedures due to federal government orders
Numerous things are taken into consideration as modifications in service operations, consisting of shifts in job functions as well as the purchase of extra protective devices.