Employee Retention Credit (ERC) program
You may qualify for up to $5,000 per employee in 2020 and $7,000 per employee in each of the first 3 quarters of 2021 which does not need to be paid back
The ERC is a refundable payroll tax credit and is eligible for businesses as a 2020 and 2021 retroactive credit.
Until late 2020, employers who had taken a PPP loan could not use the ERC. The major change resulting from legislation in late 2020, allows these employers who took PPP loans to take the employee retention credit, so long as the same wages are not used for both. This knowledge gap is preventing many businesses from pursuing the ERC.
2020 Credit of up to $5,000 per employee.
2021 enhanced credit up to $7,000 per employee in each of the first 3 quarters of 2021.
1. Business operations were modified to comply with Covid-19 government restrictions.
or
2. 50% revenue decline in any quarter of 2020 when compared to the same quarter in 2019.
or
3. 20% revenue decline in any quarter of 2021 when compared to the same quarter in 2019.
Recovery Startup Business Employee Retention Credit for Q3 and Q4 2021. $50,000 of credits available per quarter.
Recovery startup businesses qualifications:
- Business opened after 2/15/20
- Less than $1m of annual sales per year
Real clients, real savings.
2020 Example:
A restaurant with 10 employees is forced to close its dining room or limit in-house dining and shifts focus to delivery and to-go orders. The employees continue to work during this time. This is considered a partial shutdown. The timeframe is from March 13th, 2020 – December 31st, 2020.
10 employees is a potential $50,000 credit.
20 employees would be a max credit of $100,000 .
2021 Example:
The same restaurant as above with the same situation in 2021.
10 employees, quarterly max credit potential of $70,000. If max credit is applied to all 3 quarters total of $210,000 in refundable 2021 credits.
20 employees would be a max credit of $420,000.