The Employee Retention Tax Credit (ERTC) or ERC (Employee Retention Credit) was part of the Coronavirus Aid and Relief and Economic Security (CARES) Act. This was introduced to help businesses keep their employees on payroll during the COVID-19 pandemic.
According to the U.S Bureau of Labor Statistics, in 2020, 52% of establishments told employees not to work at some point during the pandemic and, of those, 51% continued to pay some or all employees while not working. This caused extreme financial burdens for many small businesses.
The ERC tax credit could be the boost your business needs to get back on track.
In this article, we’ll explain what ERTC is, what documents you will need to file for ERTC, and how to claim ERC.
If you already know you want help filing for ERTC, learn more about our ERTC filing service here.
What is ERTC (Employee Retention Tax Credit)?
ERTC is a refundable tax credit giving businesses a check for up to $26,000 per employee on their payroll.
According to the IRS, the refundable tax credit is 50% of up to $10,000 in wages from March 12, 2020, to December 31, 2020, and 70% of eligible wages paid from January 1, 2021, to September 30, 2021.
If government COVID regulations prevented you from meeting with customers, or if curfews, shutdowns, supply chain disruptions, and social distancing limited your ability to conduct business as you had prior to the regulations, you will likely qualify.
If your gross receipts declined at least 50% for 2020 (and 20% for 2021) due to pandemic-related reasons, you might also be eligible.
Take this 2-minute quiz to check your ERTC eligibility.
ERC Documents Needed
Below are the forms required to file for ERC.
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Form 941/941-X – Employer’s Quarterly Federal Tax Return
This form lists the federal tax income along with other payroll taxes that have been withheld each quarter. Each Form 941 will have three pages for each quarter that qualifies for 2020 and 2021. Form 941-X is used to correct mistakes on a Form 941 you already filed.
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Detailed Payroll Reports
This includes a full list of all employees’ names, the date they were paid, and their gross wages.
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PPP Loan Application and Forgiveness
If you received a PPP loan or forgiveness, you would likely need the information used to apply for the PPP loan.
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Basic Information about your Business
This should include a description of your business, the location of your business and employees, and employee work hours (including if any employees were on a reduced schedule).
Claim ERC
Although the ERC program expired on September 30th, 2021, businesses can retroactively apply for the credit until the statute of limitation expires.
In addition, even if your business received PPP loans, you may still qualify for ERC tax credits. That’s because “The American Rescue Plan Act of 2021” modified and expanded the previous stimulus programs.
Did you know that PPP and ERTC (also known as ERC) are programs from different governmental agencies?
The Payroll Protection Program (PPP) is administered by the Small Business Administration. And the IRS administers the Employee Retention Tax Credit (ERTC) program.
With ERTC, you may be due up to $26,000 per employee!
Although qualifying for ERTC may seem simple, you may find the process of actually filing very difficult.
Luckily, Asure can help you every step of the way! With over 90,000 small business payroll clients, Asure is great at calculating compliant payroll and filing employer taxes.
We’ve helped businesses just like yours successfully collect ERTC money owed to them by the government.
For instance,
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$552,000 in ERTC for an Asure restaurant business client in Galveston, Texas
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$689,000 in ERTC for an Asure manufacturing company client in Skokie, Illinois
In fact, Asure has filed for over $200 million in ERTC stimulus on behalf of our clients.
Asure helps small and mid-size businesses collect ERTC funds
Asure will complete this 3-step ERTC process for you:
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Review Qualified Wages
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Calculate Credit Amount
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File Amended Returns
Asure will process the credits in our payroll system for audibility and file the necessary amended tax returns.
Our Chairman and CEO, Pat Goepel, is committed to helping businesses get the funds they lawfully deserve:
“Getting this critical stimulus money in the hands of our clients is incredibly gratifying. Early in the pandemic, so much of the focus was on PPP loans and loan forgiveness. But, because the ERTC program is more complex, many small and mid-sized businesses just didn’t realize how much stimulus was available to them.”
Asure Chairman and CEO Pat Goepel is leading the effort to assist small and mid-sized businesses to obtain ERTC funds to which they’re lawfully entitled.
Our ERTC tax filing service will calculate your refund and then file the amended tax returns on your behalf.
Click here to get help calculating ERTC wages and filing your amended returns.
During the toughest times of the COVID-19 pandemic, you had a choice to make with your employees. You could have let them go, or you could have kept them employed.
The Employee Retention Tax Credit (ERTC) was created to incentivize businesses like yours to keep employees on the payroll during the pandemic. So, if you did just that, take a few moments to see if you qualify for up to $26,000 per employee.
If you’d like to speak to an HR representative about your business, contact us.