Will My Small Business Qualify For ERC?

When the coronavirus pandemic began, the small and medium-sized businesses were all forced to wind down their operations. While Congress initiated various programs for providing economic assistance to struggling business owners and employers, one such program was the ERC or the employee retention credit. 

The ERC offers eligible employers payroll tax credit for health insurance and wages paid to the company’s employees. This program has enough potential to offer you the much-needed support. Are you trying to get help filing for ERC? If yes, keep reading. 

ERC for 2020 – How to qualify

Employers and business owners are eligible for the ERC tax credit only when they paid qualified wages between 12th March 2020 and December 31, 2020, and their companies were partially or fully closed down or their business suffered from a decline in gross receipts. 

Once you qualify for ERC, it becomes available every following quarter until the gross receipts have recovered to 85% of what they were in the previous year (2019). You may choose to work with a CPA to understand whether or not you qualify. 

Qualified wages – What are they?

If you don’t understand what qualified wages are, they are the wages that are paid to employees during the gross receipt decline, and the amount paid is $10,000 per employee. In case operations were called off, the qualified wages have to be equal to what the employee would be paid in case the operation would be running. 

To what extent would this credit be?

In order to determine whether or not you qualify for the credit, you will receive worth of 50% of the initial $10,000 of qualified wages you pay to each employee between 12th March and 31st December. You’d receive a credit of up to $5000 per employee. 

When shall you apply?

941s are amended for nearly 3 years and this means you will have enough time to make a plan. Waiting is important, especially when you have to deal with such changing programs. Not only do the programs keep changing but also the guidance received. Have a consultation with the CPA as they will guide you about the right time to file a claim. 

So, if you’re all set to file for an ERC claim, you should first understand the details of ERC and then seek the help of a legal professional. For any further questions, you can leave your comments.