What is the Employee Retention Credit (ERC)?
The Employee Retention Credit is a tax incentive introduced by the CARES Act in 2020 to help small businesses keep employees on their payroll during the economic uncertainty caused by the COVID-19 pandemic. It’s a powerful program that provides eligible employers with a refundable tax credit for a portion of qualified wages and health plan expenses paid to employees.
Why is ERC Important for Small Businesses?
Financial Relief: The ERC can provide much-needed financial relief to small businesses by allowing them to claim credit against their employment tax liabilities. This can help free up cash flow, which is crucial for keeping operations running smoothly.
Employee Retention: As the name suggests, the ERC incentivizes businesses to retain their employees. Offering a tax credit for retaining and paying employees, it’s a win-win situation for both employers and their staff.
Bridge Through Difficult Times: Small businesses often face unpredictable challenges. The ERC can be a lifeline during these difficult times, allowing you to keep your workforce intact and ready to spring back when conditions improve.
Eligibility for ERC
Small businesses can qualify for the ERC if they meet certain criteria, including:
Size: Your business must have 500 or fewer employees.
Revenue Impact: You must demonstrate a significant decline in gross receipts due to the pandemic (usually a 50% decline in any quarter in 2020 or a 20% decline in 2021).
How to Claim ERC
At Hess Financial Solutions, we have a simple three-step process to help your business claim the ERC:
We Determine Your Eligibility: Qualifying factors include a revenue decline or a full or partial suspension of operations due to government orders.
We File Your Claim: Our team analyzes your claim and submits the paperwork on your behalf.
You Receive Your Money: Eligible companies can receive up to $26,000 per employee.
Conclusion
The Employee Retention Credit can be a lifeline for small businesses like yours, providing financial relief and incentives to retain your valuable employees during uncertain times. If you’re eligible, this credit could make a significant difference in your financial stability and help you weather the storm.
At Hess Financial Solutions, we’re committed to helping small businesses like yours thrive. If you have questions about the ERC, want assistance with the application process, or need guidance on any other tax or accounting matter, don’t hesitate to reach out to us. We’re here to support your success.
