Lets talk first about Accounting Entries For Employee Retention Credit :
Our group here what do these people doing everybody in this room is helping teach people about ERC and uh always supply a beautiful breakfast and have people actually learn about the program we should head to the room where we are able to show a few of the checks that we are getting for companies and I want to see that what is this this is uh hundreds of millions of dollars literally Kevin hundreds of millions of dollars so these are duplicate copies of the letters that go to customers validating that the check is on the method I suggest you know if you simply start to look at some of these here I suggest this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I mean it’s simply I mean think about the number of actual clients that went through the program yeah this is the very end this is the party at the end when the check is validated the numbers are verified and the check is on the mail in the mail from the IRS heading to the consumer so that’s how you’re able to track it you understand when you
receive this you understand the check is chosen sure and that’s when they pay so they don’t pay anything till they really receive the cash they don’t pay bottom line Wonder trust anything up until this letter is confirmed the check is on the way they transfer it into their savings account and they can truly trust Wonder trust that the procedure has been completed and the number of you believe you’ve processed given that you began this we’re about 35 000 of these for
about 6 billion dollars wow so plainly they understand what they’re doing which’s what you need you require professionals on the other end of the phone to process this and get it to where you get one of these that’s what matters all right Mr Fantastic here you’re at my YouTube channel we’re talking about something really important today the employee retention credit which most of you have never become aware of I definitely hadn’t become aware of it up until very just recently and learned a lot about it due to the fact that this is probably the most affordable cost of capital for any small company anywhere
anytime if you have workers between 5 and five hundred so I have actually got the expert with me this is Josh Fox he’s the creator and CEO of bottom line Concepts they’re the largest processor of these ERC credits this is a 170 page program so it’s not easy this isn’t like PPP we just contact your bank supervisor and state provide me a loan it doesn’t work there’s not a loan it’s an application and Josh is going to inform all of us about it and how to get it and why I’ve ended up being yes the Ambassador and paid representative for this I love this program it’s disappearing very soon you got to discover all about it let’s talk staff member retention credit Josh Fox what is an ERC let’s just start there so throughout the Trump Administration when President Trump was enacted they created the cares Act and the cares act provided companies 3 opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and practically everybody it makes a huge difference right there 2 of them are loans and one’s a refund exactly so the ERC is a refund that’s.
correct the cash money payroll tax refund okay go on sorry I just need to ensure we got that point I indicate that’s a huge difference a loan versus money cash I like cash money that’s what we’re talking about okay and the other loans are done so we’re sitting here in 2023 and the eidl is over the PPP is over and the only one left from the initial cares Act is the ERC and yes Kevin it is a stunning difficult check in the mail where you get actual money from the IRS all right so let’s discuss how it works because it seems like to me if it’s a if it’s staff member retention credit that person needed to be a staff member so I’m going to make the Assumption this money is not for the owner not for individuals on the cap table not for investors it’s for workers right you had to have owned an organization but it’s based upon you having W-2 staff members in America not 10.99. As long as you had W-2 workers and you paid federal payroll taxes that’s why you would be eligible so you have to be on payroll in 2020 on the W-2 and you have to be on payroll for the first 6 months of 2021 on the W-2 right so there were six quarters the program was open well walk us through the six quarters so you had quarters two three and four of 2020 and you had quarters one 2 and three of 2021. okay so that’s how it’s measured you need to be on the W-2 throughout that period now let’s talk my favorite part money how much can you get back per staff member that was on a W-2 in those six quarters so the estimation in 2020 to be exact Kevin is 50 of the employee’s salary to a maximum of 5 thousand dollars per staff member for the year of 2020 and in 2021 the numbers skyrocketed to 70 of the staff member’s salary to an optimum of 7 thousand per quarter how did that take place um they simply altered the rules in.
2021 versus due to the fact that the turmoil of the pandemic so they wanted to even get more to keep those employees on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 approximately five thousand Max and after that what takes place 21 000 Max in 2021 oh that’s how you develop twenty six thousand twenty one thousand to twenty twenty one plus 5 thousand in twenty twenty that’s twenty 6 thousand dollars per worker that is because that’s a lot of money it is now there’s a caveat here the PPP money would have to be decreased from the twenty six thousand dollars so if you took PPP loan one and PPP loan 2 you would decrease the 26 000 so what we’re seeing usually Kevin is if you took PPP cash someplace around ten thousand dollars an individual so let’s state hypothetically you owned a restaurant in New York City where I’m from and you had a hundred employees and you took PPP money you would still get a million dollar in the mail from the internal revenue service so it’s big certainly now the big concern is why does no one understand about this due to the fact that appearance when I first found out about this when I first met Josh you know I’ve got great deals of investments in lots of business I’m a major advocate for entrepreneurship in America and make lots of many financial investments in business owners of which lots of suffered through the pandemic when I first found out about this I called BS I do not believe it because I use the PPP we went through the money center Banks to get it it was very easy to do we had our CEOs call the banks they got their loans and that were well deserved and we used them sensibly to stay alive throughout the pandemic so when I heard about this I said nah it can’t be true however when I dug around I even contacted us to my political leader pals Guv Senators they didn’t know about it I indicate that’s how you know that’s how misinformation is that there’s no details out there then a bunch of individuals informed me well you can’t get it since you took the PPP also not real so let’s ask Josh why does nobody know about the employee retention credit you know what’s fascinating you’re discussing the banks Kevin since in the PPP loan process the federal government made it really clear that if you wanted a PPP loan you would call Wells Fargo Citibank Bank of America any of the huge banks in our country and they would process process in Canada a pre-pp loan there’s no loans in Canada by the way it’s just process procedure that’s all um and here there was turmoil because remember in the initial cares act you might refrain from doing both programs so if you had actually done PPP you might not do ERC in the original program and when they altered the law in 2021 the banks were refraining from doing ERC due to the fact that it’s not alone so you’re getting a tax refund so the government never made it clear to any person about how to.
do this does your CFO know how to do this not really she or he’s never ever done it previously do the banks do it nope the banks don’t do it the payroll companies yeah a few of them are doing it as a payroll company your accountant no your accounting professional’s never done this before unless you have an account that went into this service and bottom line my company Kevin has stayed in business considering that 2009 and we have actually been working with the federal government and the state government to recuperate cash for Fortune 500 Fortune 1000 business so a lot of our huge huge corporate customers have dealt with bottom line to recuperate other government programs we have actually done sales tax and utilize tax joblessness tax work chance tax credits research and development tax credits unclaimed property real estate tax all of these other federal government programs.
The worker retention tax credit is a broad based refundable tax credit developed to motivate.
companies to keep workers on their payroll. The credit is 50% of up to $10,000 in earnings paid by an.
company whose business is completely or partly suspended because of COVID-19 or whose gross invoices.
decline by more than 50%.
1. The credit is available to all companies no matter size including tax exempt companies. There are.
only 2 exceptions: (1) state and local governments and their instrumentalities and (2) small.
companies who take Small company Loans.
2. To certify, the employer has to satisfy one of two alternative tests. The tests are computed each.
calendar quarter– Either.
o the company’s business is completely or partly suspended by government order due to COVID-19.
during the calendar quarter or.
o the company’s gross receipts are below 50% of the comparable quarter in 2019. When the.
employer’s gross receipts go above 80% of a comparable quarter in 2019 they no longer qualify.
after completion of that quarter.
Computation of the Credit.
The quantity of the credit is 50% of the certifying wages paid up to $10,000 in total.
It is effective for earnings paid after March 13th and before December 31, 2020.
The meaning of qualifying incomes differs by whether an employer had, typically, more or less than.
100 staff members in 2019.
Business that specialize in ERC filing assistance normally offer proficiency and assistance to help companies navigate the complicated procedure of declaring the credit. They can offer numerous services, including:.
How is the employee retention credit calculated? Accounting Entries For Employee Retention Credit
Eligibility Evaluation: These business will assess your company’s eligibility for the ERC based upon elements such as your market, earnings, and operations. If you meet the requirements for the credit and identify the optimum credit amount you can claim, they can assist figure out.
Documentation and Calculation: ERC filing services will help in collecting the required documents, such as payroll records and monetary declarations, to support your claim. They will also assist compute the credit quantity based on qualified incomes and other qualifying costs.
Retroactive Claim Review: If you are qualified to declare the ERC for prior quarters, these business can evaluate your past payroll records and financials to identify prospective chances for retroactive credits. They can help you change prior tax returns to declare these refunds.
Filing Help: Companies specializing in ERC filings will prepare and send the needed kinds and documentation on your behalf. This includes finishing Type 941 or any other required tax forms.
Compliance and Updates: ERC guidelines and assistance have actually developed gradually. These companies stay upgraded with the current modifications and make sure that your filings abide by the most current guidelines. They can also offer continuous support if the internal revenue service demands extra info or carries out an audit related to your ERC claim.
It is very important to research study and vet any company using ERC filing support to guarantee their credibility and proficiency. Try to find recognized companies with experience in tax and payroll services, or think about reaching out to trusted accounting companies or tax specialists who provide ERC submitting support.
Remember that while these companies can supply valuable assistance, it’s always a great concept to have a standard understanding of the ERC requirements and procedure yourself. This will help you make informed decisions and make sure precise filings.
The Staff Member Retention Credit (ERC) is a refundable tax credit introduced by the U.S. government as part of COVID-19 relief procedures. The objective of the ERC is to encourage services to maintain and pay their workers during the pandemic, even if their operations have been impacted.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is available to eligible companies, consisting of for-profit businesses, tax-exempt organizations, and specific governmental entities. To certify, companies must fulfill one of two requirements:.
Business operations were completely or partially suspended due to a federal government order related to COVID-19.
The business experienced a significant decline in gross invoices. As mentioned earlier, for 2021, a considerable decrease is defined as a 20% decrease in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a substantial decline is specified as a 20% decline in gross invoices compared to the same quarter in 2019, or a 20% decrease in gross receipts compared to the immediately preceding quarter.
Credit Amount: The ERC is a refundable tax credit that offsets the employer’s share of Social Security taxes. The credit amount amounts to a percentage (as much as 70%) of qualified earnings paid to employees, consisting of certain health plan expenses. The maximum credit per staff member is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: Initially, organizations that got an Income Defense Program (PPP) loan were not eligible for the ERC. Legislation passed in late 2020 and extended in 2021 permits organizations to declare the ERC even if they got a PPP loan. However, the very same salaries can not be used to claim both the PPP loan forgiveness and the ERC.
Retroactive Provision: The ERC has actually been retroactively expanded and improved, permitting eligible employers to claim the credit for certified wages paid as far back as March 13, 2020. This retroactive arrangement provides an opportunity for companies to amend prior-year tax returns and get refunds.
Claiming the Credit: Employers can declare the ERC by reporting it on their employment income tax return, usually Form 941. The excess can be reimbursed to the company if the credit goes beyond the amount of employment taxes owed.
It is essential to keep in mind that the ERC arrangements and eligibility requirements have progressed over time. The very best strategy is to consult with a tax professional or go to the official IRS website for the most updated and comprehensive info regarding the ERC, consisting of any current legal modifications or updates.
To receive the ERC, a service needs to fulfill one of the following requirements:.
Business operations were fully or partially suspended due to a government order related to COVID-19.
The business experienced a significant decrease in gross invoices. For 2021, a significant decline is specified as a 20% decrease in gross invoices compared to the very same quarter in 2019. For 2022 and beyond, a significant decline is defined as a 20% decline in gross receipts compared to the exact same quarter in 2019, or a 20% decrease in gross invoices compared to the instantly preceding quarter.
The ERC is offered to services of all sizes, including tax-exempt companies, but there are some exceptions. Federal government entities and services that received a PPP loan may have constraints on declaring the credit.
The procedure for declaring the ERC includes finishing the required types and including the credit on your employment tax return (usually Type 941). The exact time it requires to process the credit can vary based on several elements, consisting of the complexity of your service and the work of the IRS. It’s recommended to talk to a tax expert for guidance specific to your circumstance.
There are several business that can assist with the procedure of declaring the ERC. Some well-known companies that use support with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young.
Please keep in mind that the information provided here is based on general understanding and may not reflect the most recent updates or changes to the ERC. It is very important to consult with a tax expert or visit the official internal revenue service site for the most updated and accurate info concerning eligibility, claiming treatments, and available help.
Less than 100. If the company had 100 or fewer employees typically in 2019, then the credit is based.
on incomes paid to all workers whether they really worked or not. Simply put, even if the.
employees worked full time and made money for full-time work, the employer still gets the credit.
Greater than 100. If the employer had more than 100 workers typically in 2019, then the credit is.
enabled only for incomes paid to staff members who did not work throughout the calendar quarter.
In both cases, “incomes” includes not just money payments but also a portion of the expense of employer.
supplied healthcare. Accounting Entries For Employee Retention Credit
Companies can be right away compensated for the credit by decreasing the amount of payroll taxes they.