The COVID-19 pandemic has had a major impact on small businesses across the country. The government has been providing relief packages to help businesses stay afloat through this difficult time. One such measure is the employee retention tax credit (ERTC).
The ERTC was introduced as part of the CARES Act in March 2020. It helps businesses keep their employees on payroll by providing tax credits to offset the cost of retaining employees during times of economic uncertainty. The credit is designed to help small businesses that have been significantly impacted by COVID-19 by providing them with an incentive to keep their employees on payroll.
The ERTC provides a refundable tax credit of up to $5,000 per employee for businesses that have been affected by COVID-19. This credit is available to eligible employers who have experienced a decline in revenue due to the pandemic. Employers who receive a PPP loan can also still qualify for the ERTC, which can provide an additional source of relief for small business owners.
One of the significant advantages of the ERTC is that it is retroactive to March 13, 2020. So, business owners can claim the credit even for employees who were already laid off, furloughed, or hours cut due to the pandemic. This retroactive feature allows businesses to claim the maximum amount of the credit, which could help them retain more of their employees during these challenging times.
The employee retention tax credit can be a vital tool for small business owners to maintain their workforce and keep their business afloat during the pandemic. It is worth noting that this credit is only available for a certain period, and businesses should take advantage of it before it expires. The latest stimulus package has extended ERTC eligibility until June 30, 2021.
To be eligible for the ERTC, businesses must have experienced at least a 50% decline in gross receipts in a specific quarter in 2020 compared to the same quarter in 2019. They can also qualify for the credit if their operations were fully or partially suspended due to government orders related to COVID-19.
In conclusion, the employee retention tax credit can be a valuable tool for small businesses during times of economic uncertainty such as COVID-19. Business owners should make use of this credit to maintain their workforce and keep their business running. By doing so, they can play their role in keeping the economy moving forward.