The Employee Retention Tax Credit Program (ERTC) is a government-sponsored program that provides tax credits to businesses that retain employees during the COVID-19 pandemic.
This program has been a lifeline for many businesses and their employees, allowing them to bridge the gap until economic conditions improve.
In this article, we will briefly discuss the top 10 benefits of ERTC so you can understand why it's such an essential resource for employers and employees alike.
We'll explain how ERTC works, what types of businesses are eligible for it, and how much money companies could potentially receive through this program.
By understanding these key points about ERTC, you'll be better informed on how it can help your business in these challenging times.
On March 27, 2020, the federal government introduced the Employee Retention Tax Credit (ERTC) under the CARES Act to help businesses retain employees during the economic crisis caused by COVID-19.
It included the Payroll Protection Program (PPP) and the Employee Retention Tax Credit (ERTC).
The ERTC is a tax credit that gives businesses a refundable tax credit per employee.
In 2021 the ERC increased to 70% of up to $10,000 in wages paid per employee per quarter for Q1, Q2, and Q3.
That is a potential of up to $21,000 per employee.
How it Works
Employers can claim an amount equal to 70% of qualified wages up to $10,000 per employee per quarter for Q1, Q2, and Q3.
Qualified wages include health insurance costs and certain expenses related to providing leave under the Families First Coronavirus Response Act (FFCRA).
This means employers can receive up to $7,000 per employee if they provide paid family leave or sick leave under FFCRA.
Employers can receive an advance payment of their ERTC amount from their payroll provider or apply directly through their tax return.
If employers choose not to accept an advance payment from their payroll provider, they will need to wait until filing their taxes to receive the credit.
Eligibility Requirements
The ERTC is available for all employers in all industries that have been affected by the COVID-19 pandemic.
This includes businesses that had to close due to government orders, as well as those that experienced significant revenue losses.
To be eligible for the ERTC, employers must have either (1) had operations suspended due to a COVID-related shutdown order or (2) experienced a year-over-year decline in gross receipts of more than 20%.
Self-employed individuals are also eligible for the ERTC if they meet these criteria.
Startups may be eligible for up to $33,000.
10 Benefits Of The ERTC Program
1)) Helps businesses retain their existing employees by providing a tax credit for doing so.
2)) Encourages employers to invest in employee development and training programs.
3)) Can be used as an incentive for recruiting new talent.
4)) Allows employers to reduce their payroll costs while still retaining key staff members.
5)) Provides an additional source of funding that can help offset the cost of employee benefits, such as health insurance and retirement savings plans.
6)) Enhances overall morale among employees who know they are valued and appreciated by their employer.
7)) Gives businesses greater flexibility when responding to changing economic conditions or market fluctuations.
8)) Promotes wage growth within organizations that offer competitive salaries and incentives based on performance metrics.
9)) Facilitates improved communication between management and staff, which helps build trust throughout the organization.
10)) Creates a positive company culture where long-term loyalty is nurtured, positively impacting customer satisfaction levels.
By providing businesses with a financial incentive to retain existing employees and attract new talent, the Employee Retention Tax Credit Program is an invaluable resource for organizations.
It also increases the overall profitability of companies that take advantage of it.
Conclusion
The Employee Retention Tax Credit Program is an invaluable resource for businesses looking to promote workplace efficiency and employee satisfaction.
With its numerous benefits, such as providing tax credits to employers who retain employees during the COVID-19 pandemic, encouraging employer investments in employee development and training programs, reducing payroll costs while still retaining key staff members, promoting wage growth within organizations that offer competitive salaries and incentives based on performance metrics, facilitating improved communication between management and staff, and creating a positive company culture where long-term loyalty is nurtured; it's no wonder why this program has become increasingly popular among businesses of all sizes.
If your business has been impacted by COVID-19, you may be eligible for the Employee Retention Tax Credit (ERTC). This refundable tax credit can provide much-needed relief for businesses of all sizes during these difficult times.
Urgent Notice: The time period that businesses can receive credits for is 2020 - 2021. However, businesses have 3 years from the end of 2021 to file. If they qualify in 2020 and 2021 they need to file by 4/15/2024 to get both years. If they don’t then they can only file for 2021, and they have to do that by 4/15/2024.
