
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 Works
This is big, a great deal of small company owners do not know about this, or they've heard about it, however they do not know much about it, even many tax experts don't understand the ins and outs of this thing due to the fact that it's new and a great deal of these changes
that are beneficial to company owners happened in the middle of tax season. So in this video I'm going to go into the employee retention credit, why it's so rewarding now in 2021, more rewarding, far more profitable, in fact now than it remained in 2020, 5x more lucrative at least. So even if you don't own an organization, make certain to share this video with entrepreneur you know, this video could actually deserve tens of thousands of dollars for them. And if you are a company owner and after you watch this video you wish to talk with me and a member of my group, who will likewise be either a CPA like myself or an EA, shoot me an email, [email protected], tell me a little about your company 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 against your payroll taxes you pay by reducing your needed employment tax deposits or you can ask for 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 kind here or the Form 941 and all the payroll stuff since that's the things your CPA must stress over. In this video I desire to inform you what you require to know so you can go to your CPA and say, "Hey, what about this employee retention credit, why have not you told me about this?" You can be informed and take ownership of your own tax circumstances, of your organization's tax circumstance to generate more money circulation in your business and more wealth for yourself.

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About Employee Retention Credit
Alright, now let's go into this and let's talk 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 advice, this video is for basic informational purposes just, yes, I am a CPA and a tax professional, however I am not your CPA nor your tax expert unless you have engaged my firm as such. Another disclaimer here, for functions of this video I am assuming that if you're enjoying this you are a small company owner, which for employee retention credit functions suggests one hundred or fewer staff members for functions of the 2020 credit and five hundred or less workers for functions of the 2021 credit, if you have a company with over five hundred employees I picture you have in-house counsel, in-house CPAs who are on top of this things, however I'm here for you small company owners who may work with a local tax professional who is so neck-deep in tax returns today since the federal government extended the tax deadline to May 17 or volume is just the nature of their company that your tax expert hasn't had the time to dig into the weeds here like I have.
So employee retention credit, why is it so rewarding for company owner in 2021 and why weren't we discussing it in 2020, it's been around given that 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, 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. Originally, in 2020, if you got a PPP loan as an employer, you were not qualified for the employee retention credit.
However the stimulus bill passed in December, the Consolidated Appropriations Act, as well as the American Rescue Plan Act, passed in February 2021, made changes to the ERC making it a lot more appealing. Basically the employee retention credit had a glow-up between 2020 and 2021, it went from the nerdy girl with thick glasses and neglected eyebrows and her hair up in 2020 to the belle of the ball for company owners in 2021. Why? Why is the employee retention credit more attractive now thanks to the Consolidated Appropriations Act and the American Rescue Plan Act? I'll tell you why, a few factors.
Why Employee Retention Credit
Very first reason, the employee retention credit for both 2020 and 2021 is now offered to PPP receivers, but obviously you can't double dip. You can't get PPP for the hundred thousand dollars you paid your workers and then turn around and declare the employee retention credit on those wages also. 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 federal government on those earnings that the government spent for you. So that makes good sense. Now, there's some preparation here. If you got PPP and you are qualified for the employee retention credit, then when you do your PPP forgiveness application, you require to pick the very best covered period that will get you full PPP forgiveness but likewise optimize your employee retention credit.
For PPP forgiveness, you want to fill up that payroll pail with as numerous costs as possible that don't count for employee retention credit purposes. For example, you can't claim the employee retention credit on state unemployment insurance coverage contributions, however state joblessness insurance contributions count towards PPP forgiveness, see? So you 'd wish to discard all your state unemployment insurance coverage contributions on your PPP forgiveness application to leave as much normal wages as possible to take the employee retention credit on.
So this can get really technical very fast and it's really circumstance 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 go into all that here, but simply 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 regards to the employee retention credit. Another thing to note is you can't subtract the salaries you declared the employee retention credit on, and that makes sense as well, why should the government provide you a reduction for these earnings 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 discussing this things, however let's speak about another reason that the employee retention credit is more attractive now than it was in 2015, and that is that it's easier to get approved for the employee retention credit in 2021. In 2020, for a quarter to get approved for the employee retention credit, you needed to reveal a 50% decrease in gross invoices compared to the exact same calendar quarter in 2019.
In 2021, for a quarter to certify 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. So this suggests far more organizations will qualify. My organization, for example, experienced a 26% decline 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, due to the fact that I got preliminary of PPP cash and second since my company didn't suffer that large 50% decrease needed to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my service qualifies. For 2021, for any quarter, you can elect to use 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 purposes of determining 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 invoices, you will also qualify for Q2 2021 because you certified in the lookback quarter of Q1 2021.
Same thing for Q2 to Q3 and Q3 to Q4, so basically if you simply receive Q1 and Q3 2021, you likewise qualify for Q2 and Q4 based on the lookback. Even if you didn't have a sufficient decline in income, you can certify for the employee retention credit if you were required to fully or partly suspend operations in your organization 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 during that period of partial or complete shutdown.
Typical example, you own a dining establishment, and your governor signed an executive order mentioning that you require to shut down indoor dining. That is an example of a partial shutdown. Also, not just 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 exact same earnings and making more companies eligible through the 20% decrease limit rather than the 50% decrease limit, but the 2021 credit is also more rewarding than the 2020 credit.
This is because for 2020, the employee retention credit amounted to 50% of all qualified salaries for 2020, the employee retention credit was equivalent to 50% of all qualified incomes you paid employees between March 12, 2020, and December 31, 2020, with a limit of $10,000 in wages for that whole time duration. So the maximum 2020 credit per staff member was $5,000. Not bad, but that's absolutely nothing compared to the 2021 credit since for 2021, the credit amounts to 70% of certified incomes per employee paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in wages 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 up to $10,000 in incomes per worker per quarter, so we're speaking about an optimum credit of $7,000 per employee per quarter. If you're eligible all four quarters, $7,000 times 4 is $28,000. That's right, folks, the optimum 2021 employee retention credit is $28,000 per employee. That's big. That's a godsend to numerous entrepreneur right now. So you see what I imply now, right, how the employee retention credit has gone from unsightly duckling in 2020 to gorgeous swan in 2021, right? And by the method, by the way, certified earnings 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 require to pick the best covered period that will get you complete PPP forgiveness however also optimize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I simply like talking about this things, however let's talk about another factor why the employee retention credit is more attractive 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 initially, since I got very first round of PPP cash and 2nd because my organization didn't suffer that big 50% decrease needed 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 new laws, making PPP recipients eligible for the employee retention credit though not on the exact same salaries and making more services eligible through the 20% decrease limit rather than the 50% decrease limit, however the 2021 credit is also more lucrative than the 2020 credit.
Not bad, but that's absolutely nothing compared to the 2021 credit since for 2021, the credit is equal to 70% of certified earnings per employee paid from January 1, 2021 through December 31, 2021, limited to $10,000 in earnings per employee ... for that entire time period?
Just How to Get going
That will certainly negotiate on behalf of their clients to get the finest prices feasible for their existing clients. They will certainly examine old invoices for mistakes getting their customers refunds as well as credits.
Services provided can include:
Dedicated specialists that will certainly interpret very complicated program rules as well as will certainly be available to answer your concerns, including:
How does the PPP loan variable into the ERC?
What are the differences between the 2020 as well as 2021 programs as well as exactly how does it relate to your business?
What are gathering regulations for larger, multi-state employers, and just how do I translate numerous states executive orders?
Exactly how do part-time, Union, and also tipped employees impact the quantity of my reimbursements?
Comprehensive analysis concerning your qualification
Extensive analysis of your claim
Guidance on the claiming procedure and also documentation
Details program know-how that a routine CPA or payroll cpu may not be well-versed in
Quick as well as smooth end-to-end process, from qualification to asserting 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/ |
Prepared To Get Going? Its Simple.
1. Whichever company you choose to work with will establish whether your service qualifies and gets approvel for the ERC.
2. They will certainly evaluate your claim and calculate the optimum quantity you can get.
3. Their group overviews you with the claiming procedure, from starting to end, including appropriate documents.
Frequently Asked Questions (FAQs)
What period does the program cover?
The program began on March 13th, 2020 as well as right on September 30, 2021, for qualified organizations.
You can get reimbursements for 2020 and also 2021 after December 31st of this year, into 2022 and 2023. As well as potentially beyond then also.
Many companies have received refunds, and others, along with reimbursements, also qualified to proceed obtaining ERC in every payroll they refine through December 31, 2021, at about 30% of their pay-roll cost.
Some companies have gotten reimbursements from $100,000 to $6 million.
Do we still certify if we already took the PPP?
Yes. Under the Consolidated Appropriations Act, businesses can currently receive the ERC also if they currently received a PPP loan. Note, though, that the ERC will just relate to wages not made use of for the PPP.
maintain a 20% decline in gross invoices .
A federal government authority needed full or partial closure of your service during 2020 or 2021. This includes your operations being limited by commerce, lack of ability to travel or restrictions of group meetings.
- Gross invoice decrease criteria is various for 2020 as well as 2021, yet is gauged against the current quarter as contrasted to 2019 pre-COVID quantities:
- A federal government authority required full or partial closure of your business during 2020 or 2021. This includes your procedures being restricted by business, lack of ability to travel or restrictions of group meetings.
- Gross invoice reduction criteria is various for 2020 and 2021, yet is gauged versus the present quarter as compared to 2019 pre-COVID amounts.
Do we still certify if we remained open during the pandemic?
Yes. To qualify, your business must satisfy either one of the following requirements:
- Experienced a decline in gross invoices by 20%, or
- Needed to transform company operations due to federal government orders
Many things are considered as adjustments in business procedures, including changes in task duties as well as the acquisition of extra safety equipment.