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.
How It Works
This is big, a lot of little organization owners don't learn about this, or they've heard about it, however they do not know much about it, even lots of tax specialists don't understand the ins and outs of this thing since it's brand-new and a lot of these changesthat are advantageous to entrepreneur occurred in the middle of tax season. So in this video I'm going to go into the employee retention credit, why it's so financially rewarding now in 2021, more profitable, even more financially rewarding, in truth now than it remained in 2020, 5x more financially rewarding at least. So even if you don't own a company, be sure to share this video with company owner you understand, this video could literally deserve tens of countless dollars for them. And if you are a business owner and after you watch 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 refund in your pocket because you can take this credit against your payroll taxes you pay by reducing your needed work 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 intricacies of that form here or the Form 941 and all the payroll things because that's the things your CPA need to fret about. In this video I desire to tell you what you need to understand 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 notified and take ownership of your own tax situations, of your company's tax scenario to create more capital in your business and more wealth for yourself.
About Employee Retention 2021 Ertc Qualifications
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 want to state that absolutely nothing in this video is to be taken as legal or tax recommendations, this video is for basic informational functions just, yes, I am a CPA and a tax expert, but I am not your CPA nor your tax professional unless you have engaged my firm. Another disclaimer here, for purposes of this video I am assuming that if you're enjoying this you are a little organization owner, which for employee retention credit purposes indicates one hundred or fewer staff members for purposes of the 2020 credit and 5 hundred or less employees for functions of the 2021 credit, if you have a business with over five hundred staff members I envision you have in-house counsel, in-house CPAs who are on top of this things, but I'm here for you small company owners who may deal with a regional tax specialist who is so neck-deep in tax returns today since the government extended the tax due date to May 17 or volume is simply the nature of their business that your tax expert hasn't had the time to go into the weeds here like I have.
So employee retention credit, why is it so profitable for company owners in 2021 and why weren't we discussing 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 since of the PPP, the Paycheck Protection Program. Originally, in 2020, if you received a PPP loan as an employer, you were not eligible for the employee retention credit.
Basically the employee retention credit had a glow-up between 2020 and 2021, it went from the unpopular lady with thick glasses and neglected eyebrows and her hair up in 2020 to the belle of the ball for company owners in 2021. Why is the employee retention credit more appealing now thanks to the Consolidated Appropriations Act and the American Rescue Plan Act?
Why Employee Retention 2021 Ertc Qualifications
Reason, 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 staff members and then turn around and claim the employee retention credit on those earnings. 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 finest covered period that will get you complete PPP forgiveness however likewise optimize your employee retention credit.
Also, for PPP forgiveness, you wish to fill that payroll container with as many expenses as possible that do not count for employee retention credit functions. For example, you can't declare the employee retention credit on state joblessness insurance contributions, but state joblessness insurance coverage contributions count towards PPP forgiveness, see? So you 'd wish to discard all your state joblessness insurance contributions on your PPP forgiveness application to leave as much common earnings as possible to take the employee retention credit on.
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 deduction for these earnings that they currently offered you a credit for? 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 attractive now than it was last year, and that is that it's easier to qualify for the employee retention credit in 2021.
However in 2021, for a quarter to certify for the employee retention credit, you only need to show a 20% decrease in gross invoices compared to the same calendar quarter in 2019. So this means far more companies will certify. My organization, for instance, experienced a 26% decline in gross receipts, comparing Q1 2019 to Q1 2021, and it was a similar story in 2015 too.
I didn't certify for the 2020 employee retention credit first, due to the fact that I got first round of PPP money and second because my company 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 business qualifies. Also, for 2021, for any quarter, you can choose to utilize the lookback quarter, implying that, for example, even if your Q1 2021 gross receipts aren't a minimum of 20% lower than your Q1 2019 gross invoices, you can compare for purposes of identifying eligibility for the employee retention credit for Q1 2021, you can compare Q4 2020 to Q4 2019. Ramification here is that if you qualify for Q1 2021 based upon Q1 2021's gross invoices, you will also receive Q2 2021 considering that you certified in the lookback quarter of Q1 2021.
Very same thing for Q2 to Q3 and Q3 to Q4, so basically if you just get approved for Q1 and Q3 2021, you also receive Q2 and Q4 based upon the lookback. Even if you didn't have an enough decline in earnings, you can qualify for the employee retention credit if you were needed to completely or partially suspend operations in your service 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 period of complete or partial shutdown.
Common example, you own a restaurant, and your guv signed an executive order stating that you require to shut down indoor dining. That is an example of a partial shutdown. Also, not just are more companies eligible for the employee retention credit thanks to these brand-new laws, making PPP recipients qualified for the employee retention credit though not on the very same wages and making more services eligible through the 20% decrease limit rather than the 50% decrease threshold, however the 2021 credit is also more lucrative than the 2020 credit.
This is because for 2020, the employee retention credit was equal to 50% of all certified earnings for 2020, the employee retention credit was equivalent to 50% of all certified wages you paid staff members between March 12, 2020, and December 31, 2020, with a limit of $10,000 in earnings for that entire period. The optimum 2020 credit per worker was $5,000. Okay, but 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, restricted to $10,000 in incomes per worker ... for that whole time duration? No. Per quarter. So 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 worker 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 4 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 many entrepreneur today. So you see what I indicate now, right, how the employee retention credit has gone from ugly duckling in 2020 to beautiful swan in 2021, right? And by the way, by the way, 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 need to choose the finest 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 just enjoy 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 easier to certify for the employee retention credit in 2021. I didn't certify for the 2020 employee retention credit first, since I got very first round of PPP cash and 2nd due to the fact that 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 organization qualifies. Not only are more services 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 salaries and making more organizations eligible through the 20% decrease threshold rather than the 50% decline limit, however the 2021 credit is also more rewarding than the 2020 credit.
Not bad, but that's nothing compared to the 2021 credit due to the fact that for 2021, the credit is equal to 70% of qualified earnings per employee paid from January 1, 2021 through December 31, 2021, limited to $10,000 in wages per employee ... for that whole time period?
Exactly How to Get going
That will bargain on behalf of their clients to obtain the ideal prices feasible for their existing customers. They will investigate old invoices for errors getting their clients refunds and also credits.
Solutions offered can include:
Devoted experts that will certainly interpret extremely intricate program rules and also will certainly be readily available 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 just how does it put on your organization?
What are gathering guidelines for bigger, multi-state employers, as well as just how do I translate several states executive orders?
Just how do part-time, Union, as well as tipped staff members affect the quantity of my refunds?
Comprehensive evaluation concerning your eligibility
Comprehensive evaluation of your claim
Guidance on the declaring process as well as documents
Particular program expertise that a regular CPA or pay-roll processor may not be well-versed in
Smooth as well as fast end-to-end process, from eligibility to asserting as well as obtaining reimbursements
|Adams Brown Strategic Allies and CPAs
|Finance Pro Plus
|Bottom Line Concepts
|Equifax Workforce Solutions
|Omega Funding solutions
|Disisaster Loan Advisors
Prepared To Get Begun? Its Simple.
1. Whichever business you pick to work with will determine whether your service certifies and gets approvel for the ERC.
2. They will evaluate your case and calculate the optimum amount you can get.
3. Their team guides you through the asserting procedure, from starting to finish, consisting of proper documentation.
Frequently Asked Questions (FAQs)
What duration does the program cover?
The program began on March 13th, 2020 and finishes on September 30, 2021, for eligible organizations.
You can obtain reimbursements for 2020 and 2021 after December 31st of this year, into 2022 and 2023. And possibly beyond then too.
Many organizations have received refunds, and others, in enhancement to refunds, also certified to continue getting ERC in every payroll they process through December 31, 2021, at around 30% of their payroll expense.
Some organizations have actually received 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 now receive the ERC also if they already obtained a PPP funding. Keep in mind, however, that the ERC will only apply to wages not made use of for the PPP.
Do we still qualify if we did not sustain a 20% decline in gross invoices .
A government authority needed full or partial closure of your business throughout 2020 or 2021. This includes your operations being limited by business, inability to travel or restrictions of group meetings.
- Gross receipt decrease requirements is different for 2020 and 2021, but is determined against the present quarter as contrasted to 2019 pre-COVID amounts:
- A government authority called for full or partial shutdown of your business during 2020 or 2021. This includes your operations being restricted by commerce, lack of ability to travel or limitations of group conferences.
- Gross receipt reduction standards is different for 2020 and 2021, but is measured versus the present quarter as contrasted to 2019 pre-COVID amounts.
Do we still certify if we stayed open throughout the pandemic?
Yes. To qualify, your business must satisfy either among the complying with requirements:
- Experienced a decline in gross invoices by 20%, or
- Needed to alter company procedures as a result of federal government orders
Several items are thought about as adjustments in business procedures, including shifts in task duties and the acquisition of added safety equipment.