Have You Received Your Employee Retention Credits?
A Blog Post from Pioneer Accounting Group
The Employee Retention Tax Credit is a “once in a lifetime” tax credit for businesses. Funding can be as high as $21,000 per employee, and does not need to be paid back.
It’s important for small business owners to look into whether they qualify for ERTC. Way too many businesses think they are not eligible. Why? Because of the confusion, misunderstanding,and misinformation floating around.
We’re here to debunk some of the myths surrounding this small business lifeline. And give you the truth about ERTC eligibility. Many businesses are surprised to find out they qualify, and that it’s not too late to claim the funds.
What is the ERTC?
The Employee retention tax credit (or ERTC, ERC, or Employee retention credit) is a program created by the CARES act. This act was signed into law in early 2020. The other well-known program that was part of this act was the PPP, or paycheck protection program.
The amendments made in recent years mean eligible employers can use both ERTC and PPP funds. There have also been changes to how much you can claim for each employee. There are now different amounts available for wages paid in 2020 vs 2021.
The ERTC Doesn’t Have to be Confusing
You can see where much of the confusion about ERTC comes from. Many small businesses do not have resources for clear and quick info on relief programs. [Pioneer Accounting Group aims to change that]
Here are the biggest misconceptions we hear about the ERTC. These are myths that have prevented many from claiming business-saving funds. Don’t let it happen to you.
Claim #1: You can’t get the ERTC and PPP.
Fact: You can qualify for and receive both the employee retention tax credit and PPP funds. The fact is that you cannot use the same employee wages to qualify for both programs.
Qualified wages used when applying for PPP forgiveness are not eligible for ERTC, so make sure you are not “double dipping.”
We’ve found that PPP funds run out for our clients about 10-15 weeks after they’re received. That’s when the ERTC can kick in.
While qualified wages used for PPP forgiveness wouldn’t be used for the ERTC,that still leaves a very large chunk of payroll that does qualify!
Claim #2: Our profit drop didn’t hit the minimum requirement to qualify.
Fact: The employee retention credit’s qualification is not profit-driven. It is revenue-driven. If a business meets the revenue drop qualification, then it qualifies regardless of what happened to profits.
Check your gross receipts for each quarter of 2020 and 2021. If there’s a decline of more than50% compared to the last year’s quarter, you may qualify.
Another way to qualify is if you started a new business after February 15, 2020, which would make you a recovery startup business.
Claim #3: Our revenue dropped, but not dramatically enough to qualify.
Fact: There is an alternative method for qualifying.Do you have proof your business was negatively impacted by government-mandated restrictions?
Did you have to adjust your hours of operation? Occupancy limits? Contact tracing orders? Supply chain issues? These are items you’d want to find documentation for to see if you qualify on this alternate basis.
Tips for ERTC Eligibility
Document everything and keep it organized and accessible. You’ll want to have documentation of eligibility support and proof. As well as certifications, PPP paperwork,and reports of how payroll expenses fit in with PPP and ERTC.
Ask for help from a trusted financial advisor. It can be tricky to apply and make sure you receive the max amount of funds you qualify for.
Get help from a professional that is experienced with these programs. Someone who can answer your questions and help you file.
How to make ERTC simple, fast, and easy.
Unfortunately, many business owners do not have the time, energy, or resources to get the assistance they need.
The CARES Act was established as the largest financial rescue package in U.S. history. And small businesses have been the recipients of 26% of those funds. And yet, there are thousands of small businesses that qualify for employee retention credit and have not received it.
Part of the problem is that the guidelines are not made simple or accessible to most business owners. The other part of the problem is that financial advisors and accountants may mistakenly believe their clients do not qualify.
In this unprecedented time, it’s more important than ever for businesses to have partners they can trust. Associates that will keep them up to date on grants, loans, and funding. Many small businesses cannot afford a business consultant or advisor. But most businesses have someone who handles bookkeeping and/or accounting.
Having an educated accountant opens up opportunities for funding. They can handle the complicated processes of applying for programs. Which takes the stress off of you, the business owner, and gives you peace of mind.
How to Find an Accountant That Helps with ERC
When looking for an accountant for your business, there are a few areas to seriously consider.
A bookkeeper or accountant should be familiar with the latest in government programs. Part of their job should be getting you the funding you need. An ideal accountant will keep themselves up to date and educated on the latest in pandemic assistance, tax credits, and other programs.
If you employ an in-house bookkeeper, it is understandable they may not have the resources to keep up on the latest news and provisions. That’s why we recommend you outsource your bookkeeping, payroll, and accounting to an accounting group or firm.
Why Outsource Accounting?
You don’t have to worry about turnover. You’ll always have a dedicated manager for your account. A highly trained staff gets payroll admin tasks done faster. You gain an entire firm’s worth of knowledge, ready to handle any unique situation you find yourself in. And a full-service firm will not only do bookkeeping, but will consult on other accounting and operational tasks.
The accounting group you choose should meet three important standards. They are always looking for ways to increase your income. They are intent on searching out ways to cut costs and expenses. And they are educated and up-to-date on the CARES Act, as well as grant, loan,and tax credit programs that fit your business.
If you’d like one on one assistance with ERTC, get a hold of us for a free consultation! Better yet, consider partnering with Pioneer Accounting Group for all your accounting needs. You’ll beat the very front of current and future recovery programs.