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Employee Retention Credit is like Money Falling from the Sky

For small businesses, the last few years have been tough. The global pandemic put many businesses at a standstill, where they were unable to trade, open to the public or even, unable to pay their staff, leading to layoffs and a much smaller workforce.

While everyone was struggling together, many businesses were crying out for some funding to help them keep their livelihood afloat.

Well, the IRS answered their call! The Employee Retention Credit Scheme was put in place to claim back funds from wages that were paid out in the years 2020 and 2021. Basing the scheme on wages was the most proportionate way for the IRS to divide this money fairly. The more employees you have, the more money there is to claim, and there are only some very easy-to-meet criteria too.

Myrtha Chang, the owner and founder of Mathnasium – a tutoring center in Newton, MA, struggled massively throughout the pandemic, with education being one of the main areas affected. This meant that she had to adapt working styles and, in some cases, reduce the working hours of her employees to make ends meet.

She stated, “Throughout the pandemic, we really struggled to keep everyone at work. Despite our best efforts, there just wasn’t enough work to go around. I was worried Id have to make pay cuts to stay on top of things, but then I heard about the ERC.”

ERC was enacted under the CARES Act provision, which initially allowed small businesses to claim up to 50% of paid wages in 2020 and 2021 if they could show they were put at a disadvantage due to government restrictions.

“I was certain that I wouldn’t meet the criteria. I’ve heard about these types of schemes before, and you always need to jump through lots of hoops to get anything back at all. But this wasn’t the case. I was told almost immediately by my accountant that I would qualify, so I went ahead.”

The scheme updated midway through 2021 due to the length and severity of lockdowns, meaning that 50% of each employee’s wage per year to claim back now turned into 70% of each employee’s wage per quarter. This even worked if you’d paid under a Paycheck Protection Plan (PPP).

The only criteria that a business needs to meet is to show that they made at least 20% less in those years than they would have normally.

The Chief Revenue Officer at ERC Benefits explains that “the criteria to claim really isn’t difficult to meet. It’s even available to people who didn’t have their business up and running prior to 2020, as long as they can show a clear disadvantage to their profit margins. However, many CPA firms have chosen not to go down the route of ERC claims, just because they don’t understand the criteria.”

Ms. Chang was surprised at the sheer amount of benefit she got back from making a claim for ERC.

“When the checks arrived from the IRS, I was in sheer shock about how much I’d actually received. It was much more than I’d ever anticipated and really helped my business to get back on its feet. I couldn’t have done it without the support of ERDC Benefits who talked me through every step of the way, right up to the point that I skipped to the bank with the checks.”

Employee Retention Credit launched in March 2020 and will continue until the end of 2023, when most businesses will, hopefully, be back on their feet again. However, you can still claim retroactively as a small business right up until the end of 2024.

If you need help, support or advice with making a claim for Employee Retention Credit, call ERC Benefits on 561 680 4677 or visit ercbenefit.com today.

Ron Paul Business News