What is Employee Retention Tax Credit, Do You Qualify & How to Get It

The pandemic dealt a huge blow to the economy, and the government tried to offer certain benefits to businesses, so as to keep them afloat and help them run their companies without any huge issues.

One such benefit is known as Employment Retention Tax Credit funding, often shortened as ERTC or simply ERC.

A plethora of companies have taken advantage of such funding, and the fact you’re here tells me you’re thinking about it too.

Here’s the definition of this type of funding: https://home.treasury.gov/system/files/136/Employee-Retention-Tax-Credit.pdf

Before you decide to take advantage of this form of relief for your business, you’ll want to understand what it actually is in the first place.

After understanding what it is, you’ll need to check whether you qualify, because applying for something if you don’t qualify for it is basically nothing but a waste of your time.

And, speaking of applying for it, that’s another thing you’ll have to learn how to do, because you want to take all the right steps and not make any errors in the process, as those errors could cost you. Meaning, making errors could lead to you getting rejected.

You won’t let that happen, though. Put simply, you will take your time to learn precisely what Employee Retention Tax Credit is, as well as to check whether you qualify for it and how to actually get it.

Once you learn all of that, you’ll be confident enough to go through the process, knowing you’ll complete it successfully and knowing your business will get the relief that it needs.

What is Employee Retention Tax Credit?

So, what exactly is ERTC? In response to the COVID-19 pandemic, the U.S. government has passed the CARES Act to provide relief both to American businesses and to American individuals. The Employment Retention Credit is part of that Act.

It is basically a fully refundable payroll tax credit which applies to certain qualified wages that businesses paid to their full-time staff from March to December 2020.

This was created for the purposes of helping people keep their jobs, because the credit allowed businesses not to let anyone go.

The ERTC can be used to hire new staff members as well, and the good thing is that you can qualify for it even if you received funds from the Paycheck Protection Program (PPP).

Of course, you have to check if you qualify for the help by taking other requirements into consideration, and the industry you’re in may also have a say in it.

If, for example, you’re in construction industry, getting more information on whether this industry qualifies for the help is of utmost importance, because you don’t want to waste your time further checking everything out if you don’t qualify.

Do You Qualify for It?

What are the requirements to take into account, though? If you were reading carefully, then you understand that one of the requirements has to do with the wages you paid from March through December 2020.

Employers that paid qualified wages in that period of time qualify for this type of help. That’s not all, though.

If your business operations were partly or fully suspended by those COVID-19 orders imposed by the government, then you are qualified for this type of help.

The orders may have limited commerce, group meetings, travels and similar operations in your business, causing some financial losses, among other things, which qualifies you for the ERTC relief.

Furthermore, if your company experienced a significant decline in gross receipts during 2020 or in the first three quarters of 2021, you could also be eligible. And so could you if you established your business after February, 2020.

Basically, two main things to ask yourself so as to check your eligibility. Do you match the decline in revenue? If the answer is yes, then you are eligible for the help.

Second question – do you have W-2 employees? If the answer to that is yes as well, then you are also eligible for ERTC funding.

And, of course, the credit amount will depend on when the business impact occurred, so you may not get the same amount as other businesses in the same industry.

Also, remembering that ERTC isn’t available to individuals is a must. Having determined your eligibility, you will now want to understand how to actually get the help.

How to Get It?

As said, now that you understand ERTC, and if you’re sure you qualify, you will now want to understand how to actually apply for the credit.

Whether the process will be complicated or not depends on you as an individual and on your knowledge and experience with filing forms for similar things, everything will be completed quite easily if you just follow all the right steps.

So, basically, what you have to do is understand which steps need to be taken in this process and then follow them to complete everything successfully and get the relief for your business.

Having determined your eligibility by taking a look at the important requirements, the next thing to do is calculate qualified wages.

After that, you’ll need to file Form 941 and claim that refundable credit with your quarterly IRS filings. Filling out the form, you’ll need to provide all the important information, including the qualified wages.

You can carry any unused credits forward to the next quarters or years and claim your refundable credit when filing the Form 941 on your next year’s income tax return.

Following all the steps the right way will lead to a successful application, and you’ll get the help you need after COVID-19.

The pandemic has had a serious negative impact on most businesses all over the world, so this kind of help is definitely needed.

If you’re struggling with anything, or if you simply need a boost from the government, using the ERTC funding will provide you with the relief you need and help you get your company back on track, operating successfully in your industry and, of course, turning profits.

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