In 2020, we dealt with a whole lot. As owners of small businesses, we had the added pressure of how we could keep our business afloat while keeping our employees and the public safe. Many of us didn’t want to let some employees go, but we just couldn’t afford to pay them.
If you were in this unfortunate position and kept your staff on payroll without making them come into work, you may qualify for an employee retention credit.
Here’s how you can find out just what this credit is and how you can implement it.
What Is Employee Retention Credit?
First, let’s just go over the basics. What exactly is employee retention credit?
Employee Retention Credit, also known as ERC, provides a tax benefit from the IRS to employers who were able to retain employees for durations of time. This past year, the ERC has been created and then updated to reflect the current pandemic, offering $5,000 in benefits to those who retained full-time employees from March 13th-December 31st of 2020.
In the new year, this program has been expanded to up to $14,000 for each full-time employee retained between January 1st- June 30th, 2020.
Who Is Eligible for the Employee Retention Credit?
As an employer and business owner, how do you know if you qualify for the Employee Retention Credit?
This largely depends on how small or large your business is and how your business fared during the pandemic.
The criteria your business must meet in order to qualify for this credit are:
- You must employ under 500 people full-time (last year, the threshold was 100 employees).
- Your organization must have been at least partially or fully suspended due to COVID guidelines.
- Experienced a decline in gross receipts; if your sales were less than 80% of what they were in the comparable quarter of 2019.
- You are not self-employed.
- If your company is not government-owned or a state entity.
If you’re still not sure if you qualify or how to go about finding out if you are, Seek Capital can help you get employee retention credit.
How Can You Implement It?
So you just found out you do qualify for an Employee Retention Credit from the IRS. How do you go about implementing it?
There are just a few steps to make sure that you have everything you need to implement ERC.
Know Your “Gross Receipts”
The first thing you need to get together is your “gross receipts” from either 2019 if your business was open or 2020 if your business is new.
These “gross receipts” are the total gross revenues of your company, regardless of the source. This is different from your business’s gross sales, which only include income from the actual products or services sold to your business’s customers.
Claim Your Credit Immediately
The great thing about this Employee Retention Credit is that you can claim it immediately. You don’t have to wait to claim your ERC if you qualify, so you should contact the IRS and get the process started ASAP so you are fully aware of how your self-employed tax filing will be impacted.
If You Overpaid, Request a Direct Refund From the IRS
If you’ve already overpaid in last year’s taxes, you are able to claim a refund from the IRS retroactively. You can claim repayment as far back as last March, so you get your write-off or reimbursement immediately.
Easily Implement Employee Retention Credit Today
Employee Retention Credit is a great program designed to help out small businesses like yours recover from this past economically devastating year. Get the financial credit from the IRS that you need today to keep your business afloat and successful.