4 employee retention credit myths debunked
Employee Retention Tax Credit is one of the hottest topics, with the Paycheck Protection Program enacted in 2020. Most businesses may qualify for this program and tax benefits from the government but may think that they do not. The US Government has devised the ERC program to help eligible businesses get grants worth $26,000 per employee. It was devised under the CARES Act and updated many times by the government to be made eligible for business houses.
The program clearly covers those businesses that have suspended their programs in 2020-2021 due to COVID-19 or experienced a decline in quarterly gross receipts of their company. Most businesses even think if they have availed of the PPP program, they are not eligible for the same. Let us now debunk a few myths regarding the same.
Essential businesses not eligible for ERC
Most essential businesses think they will not get ERTC because they have availed of PPP funds and were opened during COVID-19. However, if your essential products business was opened during the pandemic but did not have a supplier or you couldn’t reach out to your customers, it is eligible for ERTC.
My business did not see the drop in the gross receipts
Business owners need no longer worry if they have claimed the Paycheck Protection Program. Congress’s Consolidated Appropriations Act 2021 declared that PPP would only cover 2.5 times the monthly payroll expenses over 6 months. So, it leaves plenty of home for you to get the ERC benefits. Another myth that has been debunked is under CAA 2021. Now the limit has been lowered to 20% for gross receipts. Your business can be fully or partially affected by COVID-19, which makes you eligible for the tax grant.
Non-profit organizations are not eligible for ERTC
One thing worth noting here is that ERTC is a type of credit against the employer’s social security tax, which applies to both profit and non-profit organizations. It means that non-profit organizations and charities can receive Employee Retention Credit. Churches, museums, non-profit organizations, synagogues, and non-profit hospitals that provide public service are eligible for the same. It is because they were shut down during the pandemic in 2020-2021 as per government orders.
Only small business are eligible
Another myth regarding this ERTC program is that businesses with less than 500 employees are only eligible to receive this tax benefit. ERTC states that you qualify for the grant if your business remained partially or fully suspended during the pandemic. If you face a 20% decline in your gross receipts, then also you deem eligible for the same. So, having a staff with lesser employees only comes in handy when the government is issuing you this grant.
Conclusion
Employee Retention Credit has many aspects that are still unclear to the business houses who want to avail the benefits under the CARES Act. You must take the services from reputed firms like ERC Today that can help you understand ERTC completely. Reach out to the firm’s dedicated client support to get more details and to file for this tax benefit option for your employees.
