Lets talk first about Accounting Treatment For Employee Retention Credit :
Our group here what do these men doing everybody in this space is assisting teach individuals about ERC and uh always provide a beautiful breakfast and have individuals actually learn more about the program we ought to head to the space where we are able to display some of the checks that we are getting for companies and I want to see that what is this this is uh numerous countless dollars actually Kevin hundreds of countless dollars so these are replicate copies of the letters that go to clients confirming that the check is on the way I imply you understand if you simply begin to look at a few of these here I imply this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I suggest it’s simply I suggest consider the number of actual customers that went through the program yeah this is the very end this is the celebration at the end when the check is confirmed the numbers are confirmed and the check is on the mail in the mail from the IRS heading to the customer so that’s how you have the ability to track it you understand when you
receive this you understand the check is gone for sure and that’s when they pay so they don’t pay anything till they really receive the money they don’t pay bottom line Wonder trust anything until this letter is verified the check is on the method they deposit it into their bank account and they can truly rely on Wonder trust that the procedure has actually been finished and how many you think you’ve processed since you started this we’re about 35 000 of these for
about 6 billion dollars wow so clearly they know what they’re doing and that’s what you need you need specialists 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 Wonderful here you’re at my YouTube channel we’re speaking about something actually important today the staff member retention credit which most of you have never ever heard of I definitely hadn’t heard of it up until very recently and discovered a lot about it because this is probably the most affordable cost of capital for any small business anywhere
anytime if you have employees in between five and five hundred so I have actually got the professional with me this is Josh Fox he’s the founder and CEO of bottom line Principles they’re the largest processor of these ERC credits this is a 170 page program so it’s challenging this isn’t like PPP we simply call up your bank supervisor and say give me a loan it doesn’t work there’s not a loan it’s an application and Josh is going to tell us all about it and how to get it and why I’ve ended up being yes the Ambassador and paid spokesperson for this I love this program it’s going away soon you got to discover all about it let’s talk employee retention credit Josh Fox what is an ERC let’s just start there so throughout the Trump Administration when President Trump was enacted they came up with the cares Act and the cares act offered organizations three opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and nearly everyone it makes a huge difference right there 2 of them are loans and one’s a refund precisely so the ERC is a refund that’s.
fix the cash money payroll tax refund fine go on sorry I simply need to ensure we got that point I suggest that’s a big difference a loan versus cash cash I like cash cash that’s what we’re speaking 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 original cares Act is the ERC and yes Kevin it is a gorgeous difficult check in the mail where you get actual cash from the IRS all right so let’s talk about how it works because it sounds like to me if it’s a if it’s worker retention credit that individual had to be a staff member so I’m going to make the Assumption this cash is not for the owner not for people on the cap table not for shareholders it’s for workers right you had to have actually owned a service however 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 six months of 2021 on the W-2 correct so there were 6 quarters the program was open well stroll us through the 6 quarters so you had quarters 2 3 and 4 of 2020 and you had quarters one two 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 just how much can you return per worker 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 wage to a maximum of 5 thousand dollars per worker for the year of 2020 and in 2021 the numbers skyrocketed to 70 of the worker’s wage to an optimum of 7 thousand per quarter how did that take place um they just changed the rules in.
2021 versus due to the fact that the turmoil of the pandemic so they wished to even get more to keep those staff members on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 as much as five thousand Max and then what takes place 21 000 Max in 2021 oh that’s how you develop twenty 6 thousand twenty one thousand to twenty twenty one plus five thousand in twenty twenty that’s twenty 6 thousand dollars per employee that is because that’s a lot of cash it is now there’s a caution here the PPP money would need to be reduced from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan two you would minimize the 26 000 so what we’re seeing on average Kevin is if you took PPP cash somewhere around 10 thousand dollars an individual so let’s say hypothetically you owned a dining establishment in New York City where I’m from and you had a hundred employees and you took PPP cash you would still get a million dollar in the mail from the IRS so it’s huge obviously now the huge question is why does nobody know about this due to the fact that appearance when I first became aware of this when I initially met Josh you know I have actually got lots of financial investments in lots of companies I’m a major supporter for entrepreneurship in America and make many many investments in entrepreneurs of which many suffered through the pandemic when I initially became aware of this I called BS I do not think it because I utilize 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 utilized them sensibly to survive throughout the pandemic so when I became aware of this I stated nah it can’t be true but when I dug around I even called to my politician pals Governor Senators they didn’t know about it I imply that’s how you understand that’s how false information is that there’s no information out there then a lot of people informed me well you can’t get it due to the fact that you took the PPP likewise not real so let’s ask Josh why does nobody understand about the employee retention credit you understand what’s interesting you’re speaking about the banks Kevin because in the PPP loan procedure the federal government made it very clear that if you wanted a PPP loan you would call Wells Fargo Citibank Bank of America any of the huge banks in our nation and they would process process in Canada a pre-pp loan there’s no loans in Canada by the way it’s simply procedure procedure that’s all um and here there was turmoil due to the fact that remember in the initial cares act you might not do both programs so if you had actually done PPP you could not do ERC in the original program and when they changed the law in 2021 the banks were refraining from doing ERC since it’s not alone so you’re getting a tax refund so the government never made it clear to anyone about how to.
do this does your CFO know how to do this not truly she or he’s never ever done it before do the banks do it nope the banks do not do it the payroll companies yeah a few of them are doing it as a payroll company your accounting professional no your accounting professional’s never done this prior to unless you have an account that went into this business and bottom line my company Kevin has actually stayed in business given that 2009 and we have actually been dealing with the federal government and the state government to recover cash for Fortune 500 Fortune 1000 companies so a lot of our huge big corporate customers have worked with bottom line to recover other federal government programs we have actually done sales tax and utilize tax unemployment tax work opportunity tax credits research and development tax credits unclaimed home real estate tax all of these other federal government programs.
The employee retention tax credit is a broad based refundable tax credit developed to encourage.
companies to keep staff members on their payroll. The credit is 50% of approximately $10,000 in earnings paid by an.
company whose company is completely or partially suspended because of COVID-19 or whose gross receipts.
decline by more than 50%.
Schedule.
1. The credit is available to all employers regardless of size including tax exempt companies. There are.
only two exceptions: (1) state and city governments and their instrumentalities and (2) little.
businesses who take Small company Loans.
2. To qualify, the company needs to fulfill one of two alternative tests. The tests are determined each.
calendar quarter– Either.
o the employer’s company is totally or partially suspended by federal government order due to COVID-19.
throughout the calendar quarter or.
o the employer’s gross invoices are listed below 50% of the comparable quarter in 2019. When the.
company’s gross invoices go above 80% of an equivalent quarter in 2019 they no longer certify.
after the end of that quarter.
Calculation of the Credit.
The amount of the credit is 50% of the qualifying salaries paid up to $10,000 in overall.
It is effective for earnings paid after March 13th and prior to December 31, 2020.
The definition of qualifying wages varies by whether an employer had, typically, more or less than.
100 workers in 2019.
Business that concentrate on ERC filing support usually supply competence and assistance to assist organizations browse the complex process of declaring the credit. They can provide different services, consisting of:.
How is the employee retention credit calculated? Accounting Treatment For Employee Retention Credit
Eligibility Assessment: These business will assess your organization’s eligibility for the ERC based upon elements such as your market, earnings, and operations. If you meet the requirements for the credit and determine the optimum credit quantity you can claim, they can assist determine.
Paperwork and Computation: ERC filing services will help in gathering the essential paperwork, such as payroll records and financial declarations, to support your claim. They will also assist compute the credit quantity based upon eligible incomes and other qualifying expenses.
Retroactive Claim Evaluation: If you are qualified to claim the ERC for previous quarters, these business can examine your previous payroll records and financials to identify prospective opportunities for retroactive credits. They can assist you change prior tax returns to claim these refunds.
Filing Support: Companies focusing on ERC filings will prepare and submit the necessary types and documents in your place. This includes completing Form 941 or any other necessary tax forms.
Compliance and Updates: ERC guidelines and assistance have actually evolved gradually. These business remain updated with the current changes and guarantee that your filings adhere to the most current standards. They can also supply continuous support if the IRS requests additional information or performs an audit related to your ERC claim.
It’s important to research study and veterinarian any business using ERC filing help to guarantee their trustworthiness and expertise. Search for established companies with experience in tax and payroll services, or think about reaching out to relied on accounting firms or tax experts who provide ERC filing support.
Bear in mind that while these business can offer valuable support, it’s constantly a good concept to have a standard understanding of the ERC requirements and procedure yourself. This will assist you make notified choices and make sure precise filings.
The Staff Member Retention Credit (ERC) is a refundable tax credit presented by the U.S. federal government as part of COVID-19 relief measures. The goal of the ERC is to motivate businesses to retain and pay their staff members during the pandemic, even if their operations have actually been impacted.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is offered to qualified companies, consisting of for-profit services, tax-exempt organizations, and particular governmental entities. To certify, companies need to satisfy one of two criteria:.
The business operations were totally or partially suspended due to a federal government order related to COVID-19.
Business experienced a considerable decrease in gross invoices. As discussed earlier, for 2021, a significant decline is defined as a 20% decline in gross receipts compared to the very same quarter in 2019. For 2022 and beyond, a substantial decrease is defined as a 20% decrease in gross receipts compared to the same quarter in 2019, or a 20% decrease in gross receipts compared to the instantly preceding quarter.
Credit Amount: The ERC is a refundable tax credit that offsets the employer’s share of Social Security taxes. The credit amount is equal to a percentage (as much as 70%) of certified salaries paid to employees, consisting of specific health plan costs. The optimum credit per worker is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: At first, companies that got an Income Defense Program (PPP) loan were not eligible for the ERC. Legislation passed in late 2020 and extended in 2021 enables services to declare the ERC even if they received a PPP loan. The same incomes can not be used to declare both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has been retroactively broadened and improved, enabling qualified companies to claim the credit for certified incomes paid as far back as March 13, 2020. This retroactive arrangement offers an opportunity for companies to modify prior-year tax returns and get refunds.
Claiming the Credit: Companies can declare the ERC by reporting it on their employment income tax return, normally Form 941. The excess can be reimbursed to the employer if the credit surpasses the amount of employment taxes owed.
It is essential to note that the ERC arrangements and eligibility criteria have actually developed over time. The best course of action is to talk to a tax expert or go to the main IRS site for the most up-to-date and detailed information relating to the ERC, consisting of any recent legislative modifications or updates.
To receive the ERC, a business should satisfy one of the following criteria:.
Business operations were completely or partly suspended due to a federal government order related to COVID-19.
The business experienced a significant decrease in gross invoices. For 2021, a significant decrease is specified as a 20% decline in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a significant decrease is specified 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 right away preceding quarter.
The ERC is available to services of all sizes, including tax-exempt organizations, but there are some exceptions. Government entities and services that got a PPP loan may have constraints on claiming the credit.
The process for claiming the ERC includes completing the needed kinds and including the credit on your employment tax return (usually Kind 941). The exact time it takes to process the credit can differ based upon numerous elements, consisting of the complexity of your business and the workload of the internal revenue service. It’s suggested to consult with a tax professional for assistance specific to your circumstance.
There are a number of companies that can assist with the process of declaring the ERC. Some popular companies that provide support with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young.
Please note that the information supplied here is based upon general knowledge and may not reflect the most current updates or modifications to the ERC. It is necessary to speak with a tax professional or visit the official IRS site for the most accurate and up-to-date details regarding eligibility, declaring treatments, and offered help.
Less than 100. If the employer had 100 or less workers on average in 2019, then the credit is based.
on salaries paid to all staff members whether they actually worked or not. In other words, even if the.
workers worked full-time and got paid for full time work, the company still gets the credit.
Greater than 100. The credit is if the company had more than 100 workers on average in 2019.
allowed only for wages paid to workers who did not work throughout the calendar quarter.
In both cases, “earnings” includes not just cash payments however likewise a part of the cost of company.
provided healthcare. Accounting Treatment For Employee Retention Credit
Payment.
Companies can be instantly reimbursed for the credit by lowering the quantity of payroll taxes they.