Lets talk first about Q1 2021 Employee Retention Credit :
Our team here what do these men doing everyone in this room is assisting teach individuals about ERC and uh always offer a gorgeous breakfast and have individuals truly learn more about the program we must head to the space where we have the ability to display 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 actually Kevin hundreds of countless dollars so these are duplicate copies of the letters that go to clients validating that the check is on the way I mean you know if you just start to look at some of these here I indicate this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I indicate it’s just I mean think about how many real customers 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 confirmed and the check is on the mail in the mail from the internal revenue service heading to the consumer so that’s how you’re able to track it you know when you
get this you understand the check is chosen sure which’s when they pay so they don’t pay anything till they in fact receive the money they don’t pay bottom line Wonder trust anything until this letter is verified the check is on the way they deposit it into their checking account and they can truly rely on Wonder trust that the procedure has been finished and how many you think you have actually processed since you started this we’re about 35 000 of these for
about six billion dollars wow so clearly they understand what they’re doing and that’s what you need you need experts 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 talking about something actually crucial today the staff member retention credit which the majority of you have never ever heard of I certainly hadn’t become aware of it until very recently and discovered a lot about it since this is probably the most affordable expense of capital for any small business anywhere
anytime if you have staff members in between 5 and five hundred so I have actually got the specialist with me this is Josh Fox he’s the creator and CEO of bottom line Principles 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 simply call your bank supervisor and state offer me a loan it does not work there’s not a loan it’s an application and Josh is going to tell all of us 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 disappearing soon you got to discover all about it let’s talk employee retention credit Josh Fox what is an ERC let’s just begin there so throughout the Trump Administration when President Trump was enacted they developed the cares Act and the cares act offered companies three chances you had the PPP loan you had the eidl loan and you had the ERC tax refund and practically everybody it makes a huge distinction right there 2 of them are loans and one’s a refund precisely so the ERC is a refund that’s.
correct the cash money payroll tax refund alright go on sorry I simply need to ensure we got that point I indicate that’s a huge distinction a loan versus cash cash I like cash cash that’s what we’re speaking about alright 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 lovely hard check in the mail where you get actual cash from the internal revenue service all right so let’s speak about how it works because it sounds like to me if it’s a if it’s employee retention credit that individual needed to be a worker so I’m going to make the Presumption this money is not for the owner not for people on the cap table not for shareholders it’s for workers right you needed to have actually owned a company but it’s based on you having W-2 staff members in America not 10.99. so as long as you had W-2 staff members and you paid federal payroll taxes that’s why you would be eligible so you need to be on payroll in 2020 on the W-2 and you need to be on payroll for the very first 6 months of 2021 on the W-2 appropriate 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 two and three of 2021. alright so that’s how it’s measured you need to be on the W-2 during that duration now let’s talk my favorite part money just how much can you get back per employee that was on a W-2 in those six quarters so the calculation in 2020 to be precise Kevin is 50 of the worker’s salary to a maximum of five thousand dollars per worker for the year of 2020 and in 2021 the numbers increased to 70 of the employee’s wage to an optimum of 7 thousand per quarter how did that take place um they just changed the rules in.
2021 versus since the chaos 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 happens 21 000 Max in 2021 oh that’s how you create twenty six thousand twenty one thousand to twenty twenty one plus five thousand in twenty twenty that’s twenty six thousand dollars per worker that is because that’s a great deal of cash it is now there’s a caution here the PPP money would need to be minimized from the twenty six thousand dollars so if you took PPP loan one and PPP loan two you would decrease the 26 000 so what we’re seeing typically Kevin is if you took PPP cash somewhere around ten thousand dollars an individual so let’s state hypothetically you owned a dining establishment in New York City where I’m from and you had a hundred staff members and you took PPP cash you would still get a million dollar in the mail from the internal revenue service so it’s huge obviously now the big concern is why does no one know about this due to the fact that look when I first found out about this when I first fulfilled Josh you know I have actually got lots of investments in great deals of business I’m a major advocate for entrepreneurship in America and make many numerous investments in business owners of which numerous suffered through the pandemic when I first found out about this I called BS I don’t believe it since I utilize the PPP we went through the cash center Banks to get it it was really easy to do we had our CEOs call the banks they got their loans which were well been worthy of and we used them wisely to survive throughout the pandemic so when I found out about this I said nah it can’t hold true but when I dug around I even called to my politician pals Guv Senators they didn’t learn about it I suggest that’s how you understand 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 because you took the PPP likewise not true so let’s ask Josh why does nobody understand about the staff member retention credit you understand what’s interesting you’re talking about the banks Kevin since 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 big 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 chaos due to the fact that remember in the initial cares act you might refrain from doing both programs so if you had actually done PPP you might refrain from doing ERC in the original program and when they changed the law in 2021 the banks were not doing ERC due to the fact that it’s not alone so you’re getting a tax refund so the government never ever made it clear to anybody about how to.
do this does your CFO know how to do this not actually she or he’s never done it before do the banks do it nope the banks don’t do it the payroll companies yeah some of them are doing it as a payroll business your accountant no your accounting professional’s never ever done this before unless you have an account that entered into this company and bottom line my firm Kevin has actually been in business since 2009 and we have actually been working with the federal government and the state government to recover money for Fortune 500 Fortune 1000 companies so a lot of our big big business clients have actually worked with bottom line to recover other government programs we have actually done sales tax and use tax joblessness tax work opportunity tax credits research and development tax credits unclaimed property property tax all of these other government programs.
The staff member retention tax credit is a broad based refundable tax credit created to encourage.
companies to keep workers on their payroll. The credit is 50% of as much as $10,000 in wages paid by an.
Because of COVID-19 or whose gross receipts, employer whose business is totally or partly suspended.
decrease by more than 50%.
Schedule.
1. The credit is offered to all employers despite 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 certify, the employer has to meet one of two alternative tests. The tests are computed each.
calendar quarter– Either.
o the company’s service is fully or partly suspended by federal government order due to COVID-19.
during the calendar quarter or.
o the company’s gross invoices are below 50% of the comparable quarter in 2019. Once the.
employer’s gross receipts exceed 80% of a comparable quarter in 2019 they no longer qualify.
after the end of that quarter.
Calculation of the Credit.
The quantity of the credit is 50% of the qualifying wages paid up to $10,000 in overall.
It works for earnings paid after March 13th and before December 31, 2020.
The definition of qualifying earnings differs by whether an employer had, on average, basically than.
100 employees in 2019.
Companies that focus on ERC filing support usually supply know-how and assistance to assist companies browse the complex process of declaring the credit. They can offer various services, including:.
How is the employee retention credit calculated? Q1 2021 Employee Retention Credit
Eligibility Assessment: These companies will examine your service’s eligibility for the ERC based on elements such as your market, earnings, and operations. If you meet the requirements for the credit and determine the optimum credit amount you can claim, they can help identify.
Paperwork and Calculation: ERC filing services will assist in collecting the required documents, such as payroll records and financial declarations, to support your claim. They will also help determine the credit amount based upon eligible earnings and other certifying expenditures.
Retroactive Claim Evaluation: If you are eligible to declare the ERC for prior quarters, these companies can review your previous payroll records and financials to recognize prospective opportunities for retroactive credits. They can assist you change previous tax returns to claim these refunds.
Filing Support: Companies focusing on ERC filings will prepare and submit the needed forms and documentation on your behalf. This includes finishing Kind 941 or any other required tax return.
Compliance and Updates: ERC policies and guidance have progressed over time. These business remain upgraded with the most recent changes and guarantee that your filings comply with the most current guidelines. If the IRS demands extra details or conducts an audit related to your ERC claim, they can also offer ongoing support.
It is very important to research study and veterinarian any business using ERC filing help to ensure their credibility and knowledge. Search for established companies with experience in tax and payroll services, or think about reaching out to relied on accounting companies or tax professionals who provide ERC submitting support.
Remember that while these business can offer important assistance, it’s constantly a great idea to have a basic understanding of the ERC requirements and process yourself. This will help you make informed decisions and ensure precise filings.
The Employee 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 organizations to maintain and pay their staff members throughout the pandemic, even if their operations have been impacted.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is readily available to qualified employers, consisting of for-profit organizations, tax-exempt organizations, and certain governmental entities. To certify, companies should meet one of two requirements:.
Business operations were fully or partly suspended due to a government order related to COVID-19.
The business experienced a considerable decline in gross invoices. As discussed earlier, for 2021, a considerable decrease is defined as a 20% decrease in gross receipts compared to the exact same quarter in 2019. For 2022 and beyond, a substantial decrease is specified as a 20% decrease in gross invoices compared to the very same quarter in 2019, or a 20% decrease in gross invoices compared to the instantly preceding quarter.
Credit Quantity: The ERC is a refundable tax credit that offsets the company’s share of Social Security taxes. The credit quantity is equal to a percentage (approximately 70%) of certified incomes paid to staff members, consisting of certain health insurance expenses. The optimum 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 a Paycheck Defense Program (PPP) loan were not qualified for the ERC. Nevertheless, legislation passed in late 2020 and extended in 2021 allows businesses to declare the ERC even if they got a PPP loan. The very same earnings can not be utilized to declare both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has been retroactively broadened and improved, enabling eligible employers to claim the credit for qualified earnings paid as far back as March 13, 2020. This retroactive provision supplies a chance for businesses to amend prior-year tax returns and receive refunds.
Claiming the Credit: Companies can declare the ERC by reporting it on their work tax returns, generally Kind 941. The excess can be refunded to the company if the credit goes beyond the amount of work taxes owed.
It is necessary to keep in mind that the ERC arrangements and eligibility criteria have developed gradually. The best strategy is to consult with a tax expert or visit the official internal revenue service website for the most in-depth and up-to-date information relating to the ERC, including any current legislative changes or updates.
To get approved for the ERC, an organization must meet one of the following criteria:.
Business operations were completely or partly suspended due to a government order related to COVID-19.
Business experienced a significant decrease in gross receipts. For 2021, a substantial decline is defined as a 20% decrease in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a significant decline is specified as a 20% decrease in gross invoices compared to the same quarter in 2019, or a 20% decline in gross invoices compared to the immediately preceding quarter.
The ERC is readily available to organizations of all sizes, including tax-exempt companies, however there are some exceptions. Government entities and businesses that received a PPP loan may have restrictions on claiming the credit.
The procedure for claiming the ERC includes finishing the required kinds and consisting of the credit on your employment tax return (usually Type 941). The exact time it requires to process the credit can differ based on several elements, including the complexity of your business and the workload of the IRS. It’s suggested to seek advice from a tax professional for guidance particular to your scenario.
There are numerous companies that can assist with the process of declaring the ERC. These include accounting companies, tax advisory services, and payroll provider. Some widely known business that use assistance with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young. It’s advisable to research and contact these companies straight to inquire about their services and costs.
Please note that the details provided here is based on basic understanding and may not reflect the most current updates or modifications to the ERC. It is very important to seek advice from a tax professional or check out the main internal revenue service website for the most current and precise details concerning eligibility, claiming procedures, and readily available help.
Less than 100. If the employer had 100 or fewer staff members typically in 2019, then the credit is based.
on incomes paid to all workers whether they in fact worked or not. To put it simply, even if the.
employees worked full time and earned money for full time work, the company still gets the credit.
Greater than 100. The credit is if the employer had more than 100 staff members on average in 2019.
permitted only for incomes paid to workers who did not work throughout the calendar quarter.
In both cases, “salaries” includes not just money payments however likewise a portion of the expense of employer.
provided health care. Q1 2021 Employee Retention Credit
Payment.
Employers can be immediately compensated for the credit by reducing the amount of payroll taxes they.