What Are The Major Benefits of Employee Retention Tax Credit

1. What Are The Major Benefits of Employee Retention Tax Credit? The U.S. economy depends on small businesses. The rough idea is that 99.9% of all the businesses in the United States qualify as small businesses, including startups, that cover almost half of the U.S. workforce. So, small businesses are the backbone and lifeblood of the U.S economy. But, small business has also been one of the hardest-hit sectors by the pandemic. So, the government has to take the necessary measures to save up the earning sector of its workforce. As a result, the U.S. government signed the CARES act on March 27, 2020. CARES act contains a business relief provision or payroll financing for small business named ERC ( Employee Retention Credit). The main reason for the ERC is to help small businesses to retain their permanent employees. So that they can keep their business operation running before we head to the benefits of the ERC, let’s know what ERC is? What Is ERC? ERC is a refundable tax credit against particular employment taxes such as Social Security and Medicare taxes that otherwise would have been deposited. An employer can retain 50% of the qualified wages that an employer has paid after March 12, 2020, and before January 1, 2021.

2. The maximum amount the qualified employer can take into account with respect to each of its employees for all calendar quarters of 2020 and the first calendar quarter of 2021 is $10,000. So the maximum credit an employer has to pay its employee is $5000. Who Is The Eligible Employer? ● Any small business that has to fully or partially shut down the business operation due to the government-imposed restriction can be eligible to get the credit. ● Also, if an employer has faced a significant loss in the gross receipt compared to the previous years or any previous calendar quarter can apply for the ERC. For more information on the eligibility criteria of the ERC, please refer to the IRS’s website. Benefits Of The ERC Once you qualify to apply for the ERC, you can fill the form 941. These are the benefits that you will get with the ERC- 1. Employer Can Get The Immediate Access To The Credit Eligible employers can accumulate immediate access to the credit. Qualifying for ERC can let an employer decrease the amount of the tax deposits that otherwise an employer has to pay. In other words, it lets an employer have the liability on social security taxes. 2.Employers Are Not Required To Have The Sufficient Amount Of The Tax Credit An employer can receive the advance payments from the IRS if an employer does not have a sufficient amount of tax deposits to cover the credit. This is one of the major liabilities that an employer can get under the CARES act. 3. Employers Can Retain Their Permanent Employee As mentioned earlier, the main motive of the ERC is to let employers retain their permanent employees. ERC lets the employer make the reduction in some tax deposits that dominate the major amount of the payroll. Know Whether You Qualify For The ERC In case you face any difficulty claiming the ERC Credit, we recommend you take assistance from the ERC specialists. Yes! It can be a little complex to qualify for the

3. ERC on your own according to ERC requirements, but a consultant can make this task easy for you. Also, please note that if an employer has already claimed the benefits of the PPP loan, they are not eligible for the ERC. Along with this, self- employed individuals can’t apply for the ERC on the basis of their own earnings. However, they can apply for the ERC on the basis of paid wages to their employees.