You should consider the Employee Retention Credit if you had W-2 employees in 2020 or 2021 (ERC).
As you are probably aware, there is still time to apply for the ERC. And right now is a perfect moment to do this.
You can qualify for 2020 credits of up to $5,000 per employee and 2021 credits of up to $7,000 per employee for each of the first three quarters, and that’s a possibility of $26,000 per employee.
Paul, one of our clients, had ten employees in 2020 and 2021. He qualified for tax credits worth $260,000. (think FREE cash). Like Paul, you can.
There are three ways to become eligible for the ERC:
1) Significant decrease in gross receipts: Here, you compare the quarterly gross receipts with those recorded in 2019. For any ERC to be triggered, a drop of more than 50% in 2020 and more than 20% in 2021 are required.
2) A decision made by the government that has a significant impact: Your best option, in this case, is to apply the safe harbor with minimal impact. This requires verifying that the 2020 or 2021 shutdown order would have more than a 10% impact on the 2019 figures by looking at either your 2019 quarterly receipts or your 2019 quarterly hours worked by employees.
3) A government order changes how your business operates: You have a safe harbor here. Suppose the COVID-19 government order from the federal, state, or local level significantly hindered your capacity to conduct business as usual by at least 10%. In that case, the IRS considers this to have a more-than-nominal effect on your company.
All enterprises that meet the requirements for assistance from the ERC are eligible, even those that were unaffected by the COVID-19 pandemic.
Do you qualify for the ERC based on the recent rulings?