Lets talk first about Calculating The Employee Retention Credit :
Our group here what do these guys doing everybody in this room is assisting teach people about ERC and uh constantly provide a gorgeous breakfast and have people actually learn about the program we must 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 hundreds of millions of dollars actually Kevin numerous countless dollars so these are replicate copies of the letters that go to customers verifying that the check is on the way I indicate you understand if you simply start to take a look at a few 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 just I indicate think of the number of real clients that went through the program yeah this is the very end this is the party at the end when the check is confirmed 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 have the ability to track it you know when you
receive this you know the check is gone for sure which’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 till this letter is verified the check is on the method they deposit it into their checking account and they can really trust Wonder trust that the procedure has been ended up and the number of you think you’ve processed since you started this we have to do with 35 000 of these for
about six billion dollars wow so clearly they know what they’re doing and that’s what you need you require 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 talking about something really crucial today the worker retention credit which the majority of you have never ever become aware of I certainly hadn’t heard of it until very just recently and learned a lot about it because this is most likely the lowest expense of capital for any small company anywhere
anytime if you have workers in between five and five hundred so I have actually got the professional 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 hard this isn’t like PPP we simply call up your bank supervisor and say offer me a loan it doesn’t 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 have actually ended up being yes the Ambassador and paid representative for this I like this program it’s going away very 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 used businesses 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 big 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 fine go on sorry I just need to ensure we got that point I imply that’s a big difference a loan versus cash money I like money cash that’s what we’re talking about fine 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 internal revenue service all right so let’s talk 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 cash is not for the owner not for people on the cap table not for shareholders it’s for staff members right you had to have owned an organization but it’s based upon you having W-2 employees in America not 10.99. so as long as you had W-2 workers and you paid federal payroll taxes that’s why you would be qualified so you have to be on payroll in 2020 on the W-2 and you need to be on payroll for the first six months of 2021 on the W-2 appropriate so there were six quarters the program was open well walk us through the 6 quarters so you had quarters 2 three and four of 2020 and you had quarters one two and three of 2021. all right so that’s how it’s measured you have to be on the W-2 during that period now let’s talk my preferred part cash just how much can you return per staff member that was on a W-2 in those six quarters so the estimation in 2020 to be precise Kevin is 50 of the staff member’s salary to a maximum of 5 thousand dollars per worker for the year of 2020 and in 2021 the numbers escalated to 70 of the worker’s wage to a maximum of 7 thousand per quarter how did that occur um they simply altered the rules in.
2021 versus since the chaos 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 up to five thousand Max and after that 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 since that’s a great deal of cash it is now there’s a caution here the PPP cash would need to be reduced from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan 2 you would decrease the 26 000 so what we’re seeing typically Kevin is if you took PPP money someplace around 10 thousand dollars a person so let’s state hypothetically you owned a dining establishment 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 IRS so it’s big clearly now the huge concern is why does no one understand about this due to the fact that appearance when I first became aware of this when I initially met Josh you know I’ve got lots of investments in great deals of business I’m a major supporter for entrepreneurship in America and make many many financial investments in business owners of which many suffered through the pandemic when I first found out about this I called BS I do not think it due to the fact that I use 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 deserved and we utilized them sensibly to stay alive throughout the pandemic so when I heard about this I said nah it can’t be true but when I dug around I even contacted us to my political leader buddies Guv Senators they didn’t learn about it I indicate that’s how you know that’s how misinformation is that there’s no information out there then a bunch of individuals informed me well you can’t get it since you took the PPP likewise not true so let’s ask Josh why does nobody know about the staff member retention credit you know what’s interesting you’re talking about the banks Kevin due to the fact that in the PPP loan procedure 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 nation and they would process procedure 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 since remember in the original cares act you could not do both programs so if you had actually done PPP you might refrain from doing ERC in the initial program and when they altered the law in 2021 the banks were not doing ERC since it’s not alone so you’re getting a tax refund so the federal government never ever made it clear to any person about how to.
do this does your CFO understand how to do this not really he or she’s never ever done it before do the banks do it nope the banks don’t do it the payroll business yeah a few of them are doing it as a payroll business your accountant no your accountant’s never done this before unless you have an account that went into this organization and bottom line my firm Kevin has actually been in business given that 2009 and we’ve been dealing with the federal government and the state federal government to recover cash for Fortune 500 Fortune 1000 business so a great deal of our big big corporate customers have actually worked with bottom line to recuperate 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 property real estate tax all of these other federal government programs.
The worker retention tax credit is a broad based refundable tax credit designed to encourage.
companies to keep staff members on their payroll. The credit is 50% of approximately $10,000 in salaries paid by an.
company whose organization is totally or partially suspended because of COVID-19 or whose gross invoices.
decline by more than 50%.
1. The credit is offered to all employers despite size including tax exempt organizations. There are.
just 2 exceptions: (1) state and local governments and their instrumentalities and (2) small.
businesses who take Small Business Loans.
2. To certify, the employer has to fulfill one of two alternative tests. The tests are calculated each.
calendar quarter– Either.
o the company’s organization is completely or partly suspended by government order due to COVID-19.
throughout the calendar quarter or.
o the employer’s gross invoices are listed below 50% of the similar quarter in 2019. Once the.
employer’s gross invoices exceed 80% of a similar quarter in 2019 they no longer qualify.
after the end of that quarter.
Estimation of the Credit.
The amount of the credit is 50% of the qualifying incomes paid up to $10,000 in total.
It works for incomes paid after March 13th and before December 31, 2020.
The definition of certifying incomes varies by whether an employer had, typically, more or less than.
100 staff members in 2019.
Business that specialize in ERC filing assistance generally offer competence and support to help businesses browse the intricate process of declaring the credit. They can provide different services, consisting of:.
How is the employee retention credit calculated? Calculating The Employee Retention Credit
Eligibility Assessment: These companies will examine your business’s eligibility for the ERC based on elements such as your market, profits, and operations. If you meet the requirements for the credit and recognize the maximum credit quantity you can declare, they can help figure out.
Paperwork and Calculation: ERC filing services will help in gathering the necessary documentation, such as payroll records and financial statements, to support your claim. They will also help determine the credit amount based on eligible earnings and other qualifying costs.
Retroactive Claim Review: If you are qualified to declare the ERC for previous quarters, these business can examine your past payroll records and financials to determine potential chances for retroactive credits. They can assist you amend previous tax returns to claim these refunds.
Filing Assistance: Business specializing in ERC filings will prepare and send the necessary forms and documentation on your behalf. This includes finishing Type 941 or any other required tax return.
Compliance and Updates: ERC regulations and guidance have actually evolved with time. These companies remain upgraded with the most recent changes and guarantee that your filings adhere to the most existing standards. They can also provide continuous support if the internal revenue service demands extra info or performs an audit related to your ERC claim.
It is essential to research and vet any business using ERC filing assistance to ensure their reliability and competence. Try to find established companies with experience in tax and payroll services, or consider reaching out to relied on accounting firms or tax experts who offer ERC filing assistance.
Remember that while these companies can offer valuable support, it’s always an excellent idea to have a basic understanding of the ERC requirements and procedure yourself. This will assist you make notified decisions and make sure accurate 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 procedures. The goal of the ERC is to motivate services to maintain and pay their workers during the pandemic, even if their operations have actually been impacted.
Here are some key points about the ERC:.
Eligibility: The ERC is offered to eligible employers, consisting of for-profit services, tax-exempt organizations, and certain governmental entities. To certify, employers need to meet one of two requirements:.
Business operations were totally or partially suspended due to a government order related to COVID-19.
The business experienced a substantial decline in gross receipts. As pointed out earlier, for 2021, a significant decline is defined as a 20% decline in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a significant decline is specified as a 20% decline in gross invoices compared to the exact same quarter in 2019, or a 20% decrease in gross receipts 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 amounts to a percentage (as much as 70%) of certified incomes paid to staff members, including specific 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, businesses that got a Paycheck Defense Program (PPP) loan were not qualified for the ERC. However, legislation passed in late 2020 and extended in 2021 enables services to declare the ERC even if they got a PPP loan. The same salaries can not be utilized to declare both the PPP loan forgiveness and the ERC.
Retroactive Provision: The ERC has actually been retroactively broadened and improved, enabling qualified companies to claim the credit for qualified earnings paid as far back as March 13, 2020. This retroactive arrangement offers an opportunity for companies to modify prior-year tax returns and receive refunds.
Claiming the Credit: Companies can declare the ERC by reporting it on their employment tax returns, generally Form 941. The excess can be refunded to the company if the credit goes beyond the amount of work taxes owed.
It is very important to keep in mind that the ERC provisions and eligibility criteria have progressed with time. The very best strategy is to consult with a tax professional or visit the main IRS site for the most detailed and up-to-date information relating to the ERC, consisting of any recent legislative modifications or updates.
To qualify for the ERC, a company needs to fulfill among the following requirements:.
The 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 substantial decline is specified 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 exact same quarter in 2019, or a 20% decrease in gross invoices compared to the instantly preceding quarter.
The ERC is readily available to organizations of all sizes, including tax-exempt organizations, however there are some exceptions. Federal government entities and companies that received a PPP loan may have constraints on declaring the credit.
The process for declaring the ERC includes completing the necessary kinds and consisting of the credit on your employment income tax return (generally Type 941). The exact time it requires to process the credit can vary based upon several factors, including the intricacy of your company and the workload of the IRS. It’s suggested to seek advice from a tax expert for guidance specific to your situation.
There are numerous business that can assist with the procedure of declaring the ERC. These consist of accounting companies, tax advisory services, and payroll company. Some widely known business that provide help with ERC claims consist of ADP, Paychex, Deloitte, and Ernst & Young. It’s a good idea to research study and get in touch with these companies directly to inquire about their charges and services.
Please note that the information supplied here is based on general understanding and might not reflect the most recent updates or changes to the ERC. It is necessary to speak with a tax professional or visit the official IRS website for the most accurate and current info concerning eligibility, declaring procedures, and available assistance.
Less than 100. The credit is based if the company had 100 or less staff members on average in 2019.
on incomes paid to all staff members whether they actually worked or not. In other words, even if the.
employees worked full time and earned money for full-time work, the employer still gets the credit.
Greater than 100. If the employer had more than 100 workers on average in 2019, then the credit is.
enabled just for wages paid to staff members who did not work throughout the calendar quarter.
In both cases, “salaries” consists of not simply cash payments but also a portion of the cost of company.
provided health care. Calculating The Employee Retention Credit
Employers can be instantly compensated for the credit by lowering the quantity of payroll taxes they.