The CARES (Coronavirus Aid, Relief, and Economic Security) act imbibes a business relief provision known as the employee retention credit. This credit is a refundable payroll tax credit for “qualified wages” paid to retain full-time employees from March 13, 2020, to December 31, 2020. The core aim of the ERC is to encourage employers to keep their employees on the payroll even if they are not working during the Covid period. The coronavirus has hit the business owners and the employees. In such a situation, the CARES act is a ray of hope. However, it is an excellent step in this direction; several queries and doubts are associated with it. Such as, what business owners can apply for the ERC? What are its primary benefits? Which businesses are eligible for this ? and so on. This blog answers all such questions about employee retention credit, which you need to consider while applying for it. So let’s dwell into this arena and uncover surprising facts about the ERC.
Which Business Sizes Can Apply For The Employee Retention Credit?
The best answer to this question is “Yes.” Irrespective of the size of your business, you can easily apply for employee retention credit. Whether you run a trade or a business, small or a big organization, any of these types can effectively apply for the ERC. The government’s interest in all these is that it wants you to keep your employees on the payroll throughout the crisis. During the Covid times, if your business has suffered a reduction of 50% or more in gross receipts, you can qualify for the credit on wages and health care costs.
What Is The Coronavirus Aid, Relief, And Economic Security Act?
The CARES act is the $2.2 trillion stimulus bill passed by then-president Donald Trump in March 2020. This was initiated to mitigate the disastrous effect of the pandemic on businesses. As mentioned, it is a fully refundable payroll tax credit that applies to most of the qualified wages of the business, which are paid to full-time staff between March 13, 2020, and December 31, 2020. The primary purpose of this act was to ensure that the businesses could keep their staff on payroll during the Covid crisis. As layoff was one of the significant issues for businesses under Covid-19. Therefore, the CARES act can be claimed immediately to keep your employees even if the pandemic has hit the business.
Are All The Employers In The US Territory Eligible For The ERC?
Yes, employers across all US territories are eligible for credit for payments related to qualified wages. However, you also have to see that you are pretty much eligible as long as you are subject to the Federal Insurance Contribution Act under your wages structure.
What Is Required To Make Your Business Eligible For Employee Retention Credit?
Only the federal, state, and local government entities cannot claim the CARES act and the employee retention credit. Self-employed individuals are also ineligible for taking advantage of the ERC. But this doesn’t mean that you are entirely excluded from the sphere; instead, some nuance requirements allow you to claim the ERC.
The best source to get the confined information is to go through the application process, and you can quickly grasp what you are eligible for and what you are not. And under this process, we are always there to assist and help you.
The tribal governments are also eligible for the ERC. Even after going through the application process, you are still unsure whether your business can qualify, start by gathering all your documents. However, applying to determine if you qualify is the only way to know. Even if your business is not eligible under the ERC or CARES act, you may enroll in other programs.
Can The Household Employers Apply For Employee Retention Credit?
Unfortunately, the household employers cannot apply for the ERC, as they are not considered operating a trade or a business. Also, if you are a household employer and operate a trade or a business, you may qualify for the employee retention credit.
Do Tax-Exempt Employers Qualify For The ERC?
The ERC is a welcoming step for tax-exempt employers; even if you do not pay the taxes, you can apply for relief. The core idea of the ERC is to keep people employed, and your business tax commitment does not exempt you from claiming the ERC. Although if the Covid-19 pandemic negatively impacts your business, you are very much eligible for the employee retention credit.
How To Claim Employee Retention Credit?
Firstly, you have to gather as much evidence as possible to determine how the Coronavirus pandemic impacted your business. Based on this, you have to apply for the ERC. However, only a few businesses have managed to operate under Covid, whereas most businesses were not operating during the pandemic.
Suppose your business was allowed to remain in operation. Still, the situation primarily affects your incoming revenue, so you should find as much information as possible on your losses. Compare your losses to an average operation year, as this information is further needed by the IRS and the government from your business operations in 2019.
The IRS has extended the ERC support till 2024. This is done to ensure your employees’ future, as there are many uncertainties about the long and short-term impacts of the pandemic. So start by applying today to secure your business and keep your employees on the payroll.
How Does CPA Due Diligence Help You In Applying For The ERC?
We know how desperately you need to get your business back on track. If some of your queries are unaddressed by this blog or if you have other such questions, then visit our website today to know more. With our help and assistance, most businesses have applied for the ERC and received the help they needed.
We are 24×7 at your service. If you have any doubts, or questions regarding the ERC, feel free to contact us. We have a dedicated team of experts that helps you apply for the ERC without any trouble, and we provide quick and easy consulting regarding your application process.