The Employee Retention Tax Credit was introduced as part of the CARES Act to incentivize businesses to retain employees during the pandemic.
What is the ERTC?
The Employee Retention Tax Credit (ERTC) was introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The purpose of this credit was to incentivize businesses to retain their employees during the COVID-19 pandemic.
The ERTC is a tax refund that business owners can receive if they kept employees on through COVID-19. It was designed to encourage employers to keep their workers on the payroll, even if they were not able to operate at full capacity or had to shut down temporarily due to the pandemic. The credit is available to eligible employers who retained their employees, including those who were not working due to a COVID-19 related reason.
Who qualifies for the ERTC?
Businesses need to meet two criteria to qualify for the ERTC. (1) They must have experienced a significant decline in profits during 2020 or 2021. (2) They must have been fully or partially closed at some point due to COVID-19. Businesses that meet both of these criteria may qualify for the ERTC.
How does the ERTC help?
Eligible employers can claim up to 70% of qualified wages paid to each employee, up to a maximum of $10,000 in wages per employee per quarter. This means that the maximum credit amount per employee is $7,000 per quarter. The credit can be claimed for wages paid between March 12, 2020, and December 31, 2021.
The ERTC is a great opportunity for businesses that suffered but persevered through COVID-19. It provides a financial incentive for businesses that kept their workers on the payroll, even if they were not able to operate at full capacity. By reducing the financial burden of retaining employees, the ERTC helps businesses stay afloat during these difficult times.
Can the ERTC benefit your business?
If you want to know if your business is eligible for the ERTC and how you can claim it, join us for a free webinar that will give you a full breakdown of the ERTC and how it can benefit you.