What Employers Should Know About The Cares Act

1. What Employers Should Know About The Cares Act The government enacted the CARES Act into law to help the economy and its people from the economic crises. It is one of the major decisions that the government has taken so far to relieve families, employers, and employees from the coronavirus crisis. Among all the provisions and relief, certain amendments to the law mainly aim to help employers, such as employee retention credit and PPP. Employee retention credit lets employers retain their regular employees. On the other hand, the PPP loan helps employers pay payroll costs and other expenses. Both of the tax reliefs are under the CARES Act. They are aimed to help small business employers. So every employer must know about these two tax reliefs. Here is a brief about both of these provisions. The Paycheck Protection Program

2. The program provides $349 billion in federally guaranteed loans to small businesses to keep their business operation running. The business that can avail of the program’s benefits must have 500 or few employers on each of its working units. The program helps those businesses to pay the employees and maintain the operations held between February 15, 2020, to June 30, 2020. Eligible business and loan recipients for these loan programs include organizations, veteran organizations, sole properties, independent contractors, and also eligible self-employed individuals. However, Paycheck protection program loans only can be approved and extended by an SBA qualified lender. The received PPP loan amount can be used to fund ● The payroll costs and vacation, parental, family medical, and sick leave, ● Also, the payments of the assessment of the employee compensation, ● All the costs that are related to the group healthcare benefits during the whole period of paid sick, medical, or family leave, and also the insurance premium, ● Mortgage interest payments, ● Utilities and the interest on any other debt obligations incurred before February 15, 2020. Employee Retention Credit Employee retention credit is about programs to help small business employers. After the Corona crisis, small businesses have struggled to keep their regular employees. Hence, governments introduced the employee retention credit or ERC to help the employer to keep their permanent employers. The maximum amount that a qualified business employer can retain is $10,000 for each employee on the basis of the 50% 0f total number of qualified wages. Qualified wages are the payroll costs and the wages that an employer had to pay to its employees during 2020 and the first calendar quarter of 2021. The businesses that kept operating in the 2020 and first calendar quarters to 2021 are eligible to apply for the ERC. Also, the employer who has faced a significant decline in the gross receipt compared to the previous years can apply for the ERC. But employers who have received the benefits of the PPP or are self-employed individuals can’t apply for the ERC. IRS has issued certain mandates about the applying process of the ERC in which it gives the authority to every qualified employer to apply for the ERC using the form number 941. In case an employer does not owe anything to the government or, in other words, you don’t have paid all your tax, you are obliged to pay to the government. However, in that case, employees can receive the advance credit by applying form number 7100 on the IRS website. But keep in

3. mind that employers who have claimed the advance payments of the credit need to repay the credit as now the government owes something to you. Conclusion ERC is a payroll tax relief that lets qualified employers hold the tax payments that otherwise would have been paid. But PPP loans help employers to pay those payroll costs. No employer can apply for both of the loans. However, if an employer applies both of these tax reliefs on different wages, there are chances to receive the benefits of both of the loan provisions. In case you are an employer and find it difficult to understand all the requirements, then the ideal choice is for you to take help from a consultant, who can make the applying and receiving process much easier and smooth for you. When talking about the best consultant, ERC Specialists are second to none. ERC Specialists can help you to apply for the ERC or PPP loan and guide you through the whole qualifying and loan receiving process.