As we enter the third quarter of the year, it’s an ideal time for businesses to start thinking about employee retention. With the recent economic downturn, many organizations have had to lay off or furlough employees. However, as the economy gets back on track, companies will need to retain their remaining employees and hire new ones to keep up with demand. That’s where the Q3 employee retention tax credit comes in.
The employee retention credit (ERC) was introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and extended through the Consolidated Appropriations Act of 2021. The ERC is designed to incentivize businesses to continue paying their employees and prevent additional layoffs by providing a tax credit for eligible employers that retain employees.
The Q3 employee retention tax credit builds on the existing ERC and provides additional benefits for businesses that have been impacted by the pandemic. In Q3, eligible employers can claim a refundable payroll tax credit of up to $7,000 per employee per quarter. This credit is available to businesses that have experienced a decline in gross receipts of at least 20% compared to the same quarter in 2019.
To be eligible for the Q3 employee retention tax credit, businesses must meet certain criteria. The employer must have fewer than 500 full-time employees and must not have received a Paycheck Protection Program (PPP) loan in 2021. Additionally, eligible employers must have experienced a decline in gross receipts of at least 20% compared to the same quarter in 2019.
The Q3 employee retention tax credit is an excellent opportunity for businesses to get ahead of the game and retain employees during a time of economic uncertainty. By retaining employees, businesses can save money on recruiting and training costs and ensure that they have a loyal and experienced workforce to meet customer demands.
There are several steps businesses can take to prepare for the Q3 employee retention tax credit. First, businesses should review their records and determine if they meet the eligibility criteria. Next, they should calculate the amount of the credit they can claim for each eligible employee. Finally, businesses should ensure that they have proper documentation to claim the credit on their tax return.
In conclusion, the Q3 employee retention tax credit is an opportunity for businesses to get ahead of the game by retaining their employees during a time of economic uncertainty. By meeting the eligibility criteria and properly documenting their claim, businesses can save money on recruiting and training costs and ensure they have a loyal and experienced workforce. With the Q3 employee retention tax credit, businesses can take proactive steps to keep their employees and thrive in a post-pandemic economy.