The employee retention tax credit (ERTC) has been a lifeline for many businesses struggling to keep their doors open during the COVID-19 pandemic. The credit was put in place to help companies retain their employees and prevent layoffs. However, the credit has an expiration date that is fast approaching, and businesses need to be prepared for the end of this vital financial assistance program.
The ERTC is set to expire on December 31, 2021. This means that businesses have approximately two months left to take advantage of the credit. After that date, they will no longer be able to claim the credit on their taxes. For companies that have been relying on this credit to stay afloat, the end of the program could be devastating.
To qualify for the ERTC, businesses must meet certain criteria, including experiencing a significant decline in revenue due to the pandemic. The credit is available to businesses of all sizes, including non-profits. The credit is worth up to $7,000 per employee, per quarter, and can be claimed on quarterly tax returns.
If your business has been relying on the ERTC to keep your employees on staff, it’s important to make sure you’re prepared for the end of the program. Here are some steps you can take to minimize the impact on your business:
1. Review your eligibility: Make sure you meet all the criteria for the ERTC. If you’re not sure, talk to a tax professional.
2. Consider other financial assistance programs: There are other financial assistance programs available for businesses affected by the pandemic. These include the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDLs), and state and local funding initiatives. Explore all your options to see if there’s other support available for your business.
3. Plan for the future: If you can’t rely on the ERTC anymore, you need to find other ways to keep your business solvent. Consider strategies like reducing expenses, renegotiating contracts, and diversifying your revenue streams.
4. Keep accurate records: Make sure you have all the necessary documentation and records to claim the ERTC before it expires. This includes records of revenue declines, employee retention, and payroll records.
The end of the ERTC is yet another challenge for businesses affected by the pandemic. However, with careful planning and preparation, you can minimize the impact on your business and navigate this difficult time. If you’re not sure how to prepare for the end of the ERTC, talk to a tax professional who can help guide you through the process.