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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.
I am not going to get into the complexities of that type here or the Form 941 and all the payroll stuff since that's the things your CPA should fret about. In this video I wish to tell 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?" so you can be informed and take ownership of your own tax circumstances, of your organization's tax circumstance to create more capital in your organization and more wealth on your own.
Services offered can include:
Devoted professionals that will interpret very complex program guidelines as well as will certainly be offered to answer your inquiries, including:
What period does the program cover?
Irondequoit NY Employee Retention Tax Credit And Ppp
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 Functions
This is huge, a great deal of small company owners don't understand about this, or they've heard about it, however they don't understand much about it, even many tax professionals do not know the ins and outs of this thing due to the fact that it's brand-new and a lot of these modifications
that are advantageous to company owner occurred in the middle of tax season. So in this video I'm going to dig into the employee retention credit, why it's so financially rewarding now in 2021, more financially rewarding, much more financially rewarding, in reality now than it remained in 2020, 5x more financially rewarding a minimum of. Even if you don't own a company, be sure to share this video with company owners you know, this video might literally be worth 10s of thousands of dollars for them. And if you are a company owner and after you view this video you wish 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 email, [email protected], inform me a little about your business and your ballpark year-over-year profits, 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 decreasing your needed 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 stuff since that's the things your CPA should fret about. In this video I wish to tell 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?" so you can be informed and take ownership of your own tax circumstances, of your organization's tax circumstance to create more capital in your organization and more wealth on your own.
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About Employee Retention Tax Credit And Ppp
Alright, now let's dig 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 desire to state that absolutely nothing in this video is to be taken as legal or tax suggestions, this video is for basic educational functions just, yes, I am a tax and a certified public accountant expert, however I am not your CPA nor your tax expert unless you have engaged my company. Another disclaimer here, for functions of this video I am assuming that if you're viewing this you are a small service owner, which for employee retention credit purposes indicates one hundred or less employees for functions of the 2020 credit and five hundred or less employees for purposes of the 2021 credit, if you have a company with over five hundred staff members 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 regional 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 go into the weeds here like I have.
Employee retention credit, why is it so profitable for company owners in 2021 and why weren't we talking about it in 2020, it's been around given that then, given that the CARES Act? Why is it getting all this buzz now that it wasn't in 2015? Well, let's back it up. Yes, the employee retention credit has actually been around because 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 because of the PPP, the Paycheck Protection Program. Initially, in 2020, if you received a PPP loan as a company, you were not eligible for the employee retention credit.
Basically the employee retention credit had a glow-up in between 2020 and 2021, it went from the nerdy lady with thick glasses and neglected eyebrows 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 And Ppp
Very first factor, the employee retention credit for both 2020 and 2021 is now readily available to PPP receivers, however naturally 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 salaries too. The federal 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 planning here. 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 finest covered duration that will get you complete PPP forgiveness but likewise maximize your employee retention credit.
Likewise, for PPP forgiveness, you want to fill that payroll pail with as numerous expenses as possible that do not count for employee retention credit purposes. You can't declare the employee retention credit on state joblessness insurance contributions, however state joblessness insurance coverage contributions count towards PPP forgiveness, see? You 'd want to dispose all your state unemployment insurance contributions on your PPP forgiveness application to leave as much ordinary wages as possible to take the employee retention credit on.
So this can get extremely technical extremely quickly and it's really circumstance particular in regards to enhancing PPP vs. ERC and my firm has tools to figure this things out for you, I'm not going to go into all that here, however feel in one's bones that you actually need to do the math when doing your PPP forgiveness to ensure you're not leaving anything on the table in regards to the employee retention credit. Another thing to note is you can't deduct the earnings you declared the employee retention credit on, and that makes sense too, why should the government offer you a deduction for these salaries that they already offered you a credit for? Essentially the credit is tax-effected. Alright, sorry for getting a little sidetracked there, I just enjoy discussing this stuff, but let's talk about another reason the employee retention credit is more attractive now than it was in 2015, and that is that it's much easier to get approved for the employee retention credit in 2021. In 2020, for a quarter to certify for the employee retention credit, you had 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 reveal a 20% reduction in gross receipts compared to the same calendar quarter in 2019. So this suggests even more organizations will qualify. My company, for example, experienced a 26% decline in gross receipts, comparing Q1 2019 to Q1 2021, and it was a comparable story in 2015 too.
I didn't qualify for the 2020 employee retention credit initially, because I got first round of PPP cash and 2nd because 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 company certifies. Also, for 2021, for any quarter, you can elect to use the lookback quarter, suggesting 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 purposes of determining eligibility for the employee retention credit for Q1 2021, you can compare Q4 2020 to Q4 2019. Ramification here is that if you get approved for Q1 2021 based on Q1 2021's gross receipts, you will likewise certify for Q2 2021 since you qualified in the lookback quarter of Q1 2021.
Exact 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 adequate decrease in earnings, you can receive the employee retention credit if you were required to totally 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 during that duration of full or partial shutdown.
Common example, you own a restaurant, and your guv signed an executive order specifying that you require to shut down indoor dining. That is an example of a partial shutdown. Not just are more companies 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 earnings and making more businesses 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 absolutely nothing compared to the 2021 credit since for 2021, the credit is equal to 70% of certified incomes per employee paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in earnings per employee ... for that whole time period? 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 worker per quarter, so we're talking about an optimum credit of $7,000 per employee per quarter. That's right, folks, the optimum 2021 employee retention credit is $28,000 per staff member.
If you got PPP and you are qualified for the employee retention credit, then when you do your PPP forgiveness application, you require to select the finest covered period that will get you complete PPP forgiveness however also maximize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I just like talking about this things, however 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 simpler to qualify for the employee retention credit in 2021. I didn't certify for the 2020 employee retention credit initially, since I got first round of PPP cash and second since my business didn't suffer that big 50% decline required to qualify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my service certifies. Not just are more organizations qualified for the employee retention credit thanks to these 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% decrease threshold, however the 2021 credit is likewise more financially rewarding 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 incomes per worker paid from January 1, 2021 through December 31, 2021, limited to $10,000 in earnings per staff member ... for that whole time duration?
How to Begin
The best method is to collaborate with a no-risk, contingency-based expense financial savings company. That will certainly work out in behalf of their customers to obtain the most effective costs feasible for their existing customers. They will investigate old invoices for errors getting their customers refunds as well as tax credits. They can boost the profitability and also overall appraisal of their clients organizations.
Services offered can include:
Devoted professionals that will interpret very complex program guidelines as well as will certainly be offered to answer your inquiries, including:
How does the PPP loan factor right into the ERC?
What are the differences between the 2020 and 2021 programs and how does it use to your service?
What are gathering rules for bigger, multi-state employers, and just how do I analyze numerous states executive orders?
How do part-time, Union, and tipped employees influence the amount of my reimbursements?
Detailed evaluation concerning your qualification
Thorough evaluation of your situation
Assistance on the claiming procedure and documents
Particular program knowledge that a routine CPA or payroll cpu could not be well-versed in
Smooth as well as rapid end-to-end process, from qualification to declaring and receiving reimbursements
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| 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 |
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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/ |
| ERTC Filing https://info.ertcfiling.com/employee-retention-tax-credit-new-york-11368/ |
Prepared To Start? Its Simple.
1. Whichever firm you select to work with will establish whether your company qualifies and gets approvel for the ERC.
2. They will examine your request and calculate the optimum amount you can obtain.
3. Their team overviews you via the claiming procedure, from beginning to end, consisting of proper documents.
Frequently Asked Questions (FAQs)
What period does the program cover?
The program began on March 13th, 2020 and also right on September 30, 2021, for eligible organizations.
You can look for refunds for 2020 as well as 2021 after December 31st of this year, right into 2022 and 2023. As well as potentially past then as well.
Many companies have received refunds, and others, in enhancement to refunds, likewise certified to proceed getting ERC in every pay-roll they refine through December 31, 2021, at around 30% of their payroll expense.
Some companies have actually obtained reimbursements from $100,000 to $6 million.
Do we still certify if we already took the PPP?
Yes. Under the Consolidated Appropriations Act, organizations can currently get approved for the ERC also if they currently obtained a PPP loan. Keep in mind, though, that the ERC will just relate to wages not made use of for the PPP.
sustain a 20% reduction in gross invoices .
A government authority needed complete or partial shutdown of your service throughout 2020 or 2021. This includes your operations being restricted by commerce, failure to take a trip or limitations of team meetings.
- Gross receipt decrease standards is various for 2020 and 2021, however is determined against the existing quarter as compared to 2019 pre-COVID quantities:
- A federal government authority required complete or partial closure of your service during 2020 or 2021. This includes your operations being restricted by commerce, inability to take a trip or constraints of group meetings.
- Gross receipt decrease requirements is different for 2020 as well as 2021, yet is determined versus the current quarter as contrasted to 2019 pre-COVID amounts.
Do we still certify if we remained open during the pandemic?
Yes. To certify, your service should meet either one of the following criteria:
- Experienced a decrease in gross receipts by 20%, or
- Had to change business operations as a result of government orders
Several products are thought about as adjustments in company operations, including shifts in work duties and also the purchase of additional protective tools.