Many businesses are unaware of the Employee Retention Credit (ERC) or may have misconceptions that it’s a scam. We want to assure you that this credit is legitimate and encourage you to seize this opportunity while it’s available. This credit applies to qualified wages paid between March 12, 2020, and January 1, 2022. Don’t miss out on this valuable opportunity to benefit your business.
This credit allows for a refundable payroll tax credit equivalent to 70% of qualified wages paid, with a maximum of $26,000 per employee.
It is essential to be aware that claiming the ERC will require amending employment tax returns and income tax returns.
Employee Retention Credit (ERC) Can Support Employers
The Employee Retention Credit (ERC) offers substantial financial assistance to small and medium-sized businesses amid the COVID-19 pandemic, and can provide support to employers in regards to the following:
- Alleviating Payroll Expenses: Employers can utilize the ERC to cover payroll expenses for eligible employees, thereby helping to lower their overall payroll costs.
- Offering Financial Relief: The ERC provides a refundable tax credit that can be utilized to offset the employer’s portion of payroll taxes, offering crucial financial relief to struggling businesses.
- Promoting Employee Retention: With financial incentives in place, the ERC encouraged employers to retain their workforce instead of resorting to layoffs or reducing work hours.
- Decreasing Tax Liabilities: The ERC reduces the employer’s share of payroll taxes, effectively reducing their overall tax liability.
- Enhancing Cash Flow: As a refundable tax credit, the ERC improves cash flow by providing businesses with additional funds that can be allocated towards other essential expenses.
The Employee Retention Credit (ERC) presents a valuable opportunity for business owners seeking to minimize payroll expenses and enhance their financial performance. It is crucial for employers to remain well-informed about the latest guidance issued in Q3 and Q4 of 2022 to make informed choices regarding the optimal utilization of this tax credit. By staying up-to-date, businesses can maximize the benefits of the ERC and make strategic decisions to improve their bottom line.
To claim the Employee Retention Credit (ERC), eligible employers must include it on their quarterly employment tax returns, allowing them to immediately benefit from the credit by reducing their overall payroll tax liability. It’s important for employers to be aware that they cannot claim both ERC and Paycheck Protection Program (PPP) loan forgiveness for the same wages paid. Additionally, there are specific criteria and quarterly limitations to consider when claiming the ERC. At Stauffer & Associates, we have helped many businesses qualify for this credit and maximize their bottom line. Contact our office or schedule a free consultation today to explore how we can assist your business.