Lets talk first about How To Record The Employee Retention Credit :
Our group here what do these people doing everybody in this space is helping teach people about ERC and uh always offer a lovely breakfast and have people actually learn about the program we need to head to the room where we have the ability 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 duplicate copies of the letters that go to clients verifying that the check is on the way I mean you know if you simply begin to 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 suggest it’s just I imply think about the number of actual clients 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 verified and the check is on the mail in the mail from the internal revenue service heading to the customer so that’s how you have the ability to track it you know when you
receive this you know the check is chosen sure and that’s when they pay so they don’t pay anything up until they in fact receive the cash they don’t pay bottom line Wonder trust anything up until this letter is confirmed the check is on the way they transfer it into their bank account and they can genuinely trust Wonder trust that the procedure has actually been finished and how many you believe you’ve processed since you started this we’re about 35 000 of these for
about six billion dollars wow so plainly they understand what they’re doing and that’s what you require you require 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 discussing something really essential today the staff member retention credit which most of you have never ever become aware of I definitely hadn’t become aware of it up until very recently and found out a lot about it due to the fact that this is probably the lowest cost of capital for any small company anywhere
anytime if you have staff members in between five and five hundred so I have actually got the expert with me this is Josh Fox he’s the creator and CEO of bottom line Concepts they’re the biggest 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 manager and state give 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 become yes the Ambassador and paid spokesperson for this I love this program it’s disappearing very soon you got to find out all about it let’s talk staff member retention credit Josh Fox what is an ERC let’s just start there so during the Trump Administration when President Trump was enacted they came up with the cares Act and the cares act offered businesses 3 chances you had the PPP loan you had the eidl loan and you had the ERC tax refund and almost everyone it makes a huge difference right there 2 of them are loans and one’s a refund exactly so the ERC is a refund that’s.
correct the cash cash payroll tax refund alright go on sorry I simply need to ensure we got that point I imply that’s a big distinction a loan versus money cash I like money money 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 lovely hard 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 worker retention credit that individual had to be a worker so I’m going to make the Assumption this money is not for the owner not for individuals on the cap table not for investors it’s for employees right you needed to have owned a business however it’s based upon you having W-2 employees 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 qualified so you need 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 stroll us through the 6 quarters so you had quarters two 3 and four of 2020 and you had quarters one two and three of 2021. alright so that’s how it’s determined you have to be on the W-2 during that period now let’s talk my favorite part cash how much can you get back per staff member that was on a W-2 in those 6 quarters so the calculation in 2020 to be specific Kevin is 50 of the employee’s wage to an optimum of five thousand dollars per employee for the year of 2020 and in 2021 the numbers increased to 70 of the staff member’s income to a maximum of 7 thousand per quarter how did that happen um they just changed the rules in.
2021 versus due to the fact that the chaos of the pandemic so they wanted 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 up to 5 thousand Max and then what takes place 21 000 Max in 2021 oh that’s how you create twenty 6 thousand twenty one thousand to twenty twenty one plus five thousand in twenty twenty that’s twenty six thousand dollars per employee 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 decreased from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan two you would lower the 26 000 so what we’re seeing typically Kevin is if you took PPP cash someplace around ten thousand dollars a person so let’s state hypothetically you owned a restaurant in New york city City where I’m from and you had a hundred workers and you took PPP cash you would still get a million dollar in the mail from the internal revenue service so it’s substantial obviously now the huge concern is why does no one know about this since appearance when I initially found out about this when I initially satisfied Josh you know I’ve got great deals of financial investments in lots of business I’m a significant advocate for entrepreneurship in America and make lots of lots of financial investments in business owners of which lots of suffered through the pandemic when I first heard about this I called BS I do not believe it because I use the PPP we went through the cash center Banks to get it it was extremely easy to do we had our CEOs call the banks they got their loans which were well deserved and we utilized them carefully to stay alive throughout the pandemic so when I heard about this I said nah it can’t hold true but when I dug around I even contacted us to my politician good friends Governor Senators they didn’t understand about it I suggest that’s how you know that’s how false information is that there’s no information out there then a bunch of individuals told me well you can’t get it since you took the PPP also not true so let’s ask Josh why does no one know about the employee retention credit you understand what’s fascinating you’re discussing the banks Kevin due to the fact that in the PPP loan process the federal government made it really clear that if you desired a PPP loan you would call Wells Fargo Citibank Bank of America any of the big 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 process procedure that’s all um and here there was turmoil due to the fact that remember in the original cares act you might not do both programs so if you had done PPP you could refrain from doing ERC in the initial 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 federal government never made it clear to anybody about how to.
do this does your CFO know how to do this not really she or he’s never done it previously 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 accounting professional no your accountant’s never ever done this prior to unless you have an account that entered into this service and bottom line my firm Kevin has actually stayed in business since 2009 and we have actually been dealing with the federal government and the state government to recover cash for Fortune 500 Fortune 1000 business so a lot of our big big corporate customers have worked with bottom line to recover other federal government programs we have actually done sales tax and use tax unemployment tax work chance tax credits research and development tax credits unclaimed home property tax all of these other government programs.
The worker retention tax credit is a broad based refundable tax credit developed to motivate.
companies to keep staff members on their payroll. The credit is 50% of up to $10,000 in salaries paid by an.
Because of COVID-19 or whose gross receipts, company whose business is completely or partially suspended.
decrease by more than 50%.
1. The credit is readily available to all employers no matter size including tax exempt organizations. There are.
only 2 exceptions: (1) state and local governments and their instrumentalities and (2) small.
companies who take Small company Loans.
2. To qualify, the company has to meet one of two alternative tests. The tests are determined each.
calendar quarter– Either.
o the employer’s organization is completely or partially suspended by government order due to COVID-19.
throughout the calendar quarter or.
o the employer’s gross receipts are listed below 50% of the similar quarter in 2019. As soon as the.
company’s gross invoices exceed 80% of an equivalent quarter in 2019 they no longer qualify.
after completion of that quarter.
Estimation of the Credit.
The amount of the credit is 50% of the qualifying wages paid up to $10,000 in total.
It works for salaries paid after March 13th and prior to December 31, 2020.
The meaning of qualifying wages varies by whether a company had, usually, basically than.
100 staff members in 2019.
Business that specialize in ERC filing support generally supply know-how and assistance to help organizations navigate the complicated process of declaring the credit. They can use various services, consisting of:.
How is the employee retention credit calculated? How To Record The Employee Retention Credit
Eligibility Assessment: These business will assess your business’s eligibility for the ERC based upon factors such as your industry, earnings, and operations. They can assist figure out if you fulfill the requirements for the credit and determine the maximum credit quantity you can declare.
Documents and Computation: ERC filing services will assist in gathering the needed documents, such as payroll records and monetary statements, to support your claim. They will likewise help determine the credit amount based on eligible incomes and other qualifying costs.
Retroactive Claim Evaluation: If you are qualified to declare the ERC for previous quarters, these business can examine your previous payroll records and financials to recognize potential opportunities for retroactive credits. They can help you modify previous tax returns to claim these refunds.
Filing Support: Business focusing on ERC filings will prepare and send the needed types and paperwork on your behalf. This consists of completing Kind 941 or any other required tax return.
Compliance and Updates: ERC regulations and assistance have actually evolved gradually. These companies stay updated with the current changes and guarantee that your filings abide by the most current standards. If the Internal revenue service demands extra details or performs an audit associated to your ERC claim, they can also provide ongoing support.
It is necessary to research study and veterinarian any business providing ERC filing support to ensure their trustworthiness and competence. Search for recognized companies with experience in tax and payroll services, or consider connecting to relied on accounting companies or tax professionals who offer ERC submitting assistance.
Keep in mind that while these business can provide important help, it’s constantly an excellent idea to have a fundamental understanding of the ERC requirements and process yourself. This will assist you make notified decisions and make sure precise filings.
The Employee Retention Credit (ERC) is a refundable tax credit presented by the U.S. federal government as part of COVID-19 relief procedures. The objective of the ERC is to motivate businesses to retain and pay their staff members during the pandemic, even if their operations have actually been affected.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is offered to qualified companies, including for-profit companies, tax-exempt companies, and certain governmental entities. To certify, companies should satisfy one of two criteria:.
Business operations were fully or partially suspended due to a federal government order related to COVID-19.
The business experienced a considerable decline in gross invoices. As discussed previously, for 2021, a considerable decline is specified as a 20% decline in gross receipts compared to the exact 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% decline in gross receipts compared to the instantly preceding quarter.
Credit Quantity: The ERC is a refundable tax credit that offsets the employer’s share of Social Security taxes. The credit amount amounts to a percentage (as much as 70%) of qualified earnings paid to staff members, consisting of specific health insurance 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, organizations that received a Paycheck Defense Program (PPP) loan were not eligible for the ERC. Legislation passed in late 2020 and extended in 2021 allows services to claim 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 Provision: The ERC has actually been retroactively expanded and boosted, allowing qualified employers to claim the credit for certified incomes paid as far back as March 13, 2020. This retroactive arrangement offers a chance for services to modify prior-year tax returns and get refunds.
Claiming the Credit: Companies can claim the ERC by reporting it on their employment tax returns, generally Type 941. The excess can be reimbursed to the company if the credit surpasses the quantity of work taxes owed.
It is necessary to keep in mind that the ERC provisions and eligibility criteria have actually progressed in time. The best strategy is to talk to a tax professional or visit the official internal revenue service website for the most comprehensive and updated information relating to the ERC, consisting of any recent legal changes or updates.
To receive the ERC, an organization must fulfill one of the following criteria:.
Business operations were completely or partially suspended due to a federal government order related to COVID-19.
The business experienced a considerable decrease in gross receipts. For 2021, a significant decline is specified as a 20% decline in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a significant decline is defined as a 20% decrease in gross invoices compared to the exact same quarter in 2019, or a 20% decline in gross receipts compared to the immediately preceding quarter.
The ERC is readily available to companies of all sizes, consisting of tax-exempt companies, but there are some exceptions. Government entities and organizations that received a PPP loan may have restrictions on declaring the credit.
The process for declaring the ERC includes completing the essential types and including the credit on your work income tax return (generally Form 941). The exact time it requires to process the credit can differ based on a number of factors, consisting of the complexity of your service and the workload of the internal revenue service. It’s recommended to consult with a tax expert for assistance particular to your scenario.
There are numerous companies that can help with the process of claiming the ERC. These include accounting companies, tax advisory services, and payroll provider. Some widely known business that provide assistance with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young. It’s a good idea to research and call these companies directly to inquire about their services and fees.
Please note that the details provided here is based upon general knowledge and might not show the most current updates or changes to the ERC. It is very important to talk to a tax professional or go to the official internal revenue service website for the most current and precise info concerning eligibility, claiming treatments, and offered help.
Less than 100. If the company had 100 or fewer workers typically in 2019, then the credit is based.
on earnings paid to all staff members whether they actually worked or not. Simply put, 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 employer had more than 100 workers on average in 2019.
allowed just for wages paid to workers who did not work throughout the calendar quarter.
In both cases, “wages” includes not just cash payments however likewise a portion of the cost of company.
supplied healthcare. How To Record The Employee Retention Credit
Employers can be immediately compensated for the credit by lowering the quantity of payroll taxes they.