The majority of American businesses qualified for and applied for the PPP Loans (designed to keep employees on payroll) offered by the Small Business Administration. This vital lifeline provided under provisions of the Cares Act helped save millions of businesses from the dramatic economic downturn caused by the pandemic and subsequent closure orders.
While most business owners, accountants, and business specialists were aware of the PPP Loan program, many others were and are still unaware of an invaluable IRS tax credit, the Employee Retention Credit (ERC).
The ERC was created to encourage employers to keep employees on the payroll, even if they were not working during the coronavirus outbreak.
What Is the ERC, And Why Should You Care?
According to the IRS website: The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12th, 2020, and before January 1st, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer’s employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.
For each employee, wages (including certain health plan costs) up to $10,000 can be counted to determine the amount of the 50% credit. In addition, because this credit can apply to wages already paid after March 12th, 2020, many struggling employers can get access to this credit by reducing upcoming deposits or requesting an advance credit onForm 7200, Advance of Employer Credits Due To COVID-19.
Time Is Of the Essence
Second-quarter 941 tax filings are due this month—July 31st! And, the final date to take advantage of the ERC is December 31st, 2021. But, busy business owners should not put this important tax credit and funding off to the last minute. Because filers will need payroll data and other paperwork, now is the perfect time to get it started and submit. And, the faster an eligible business files, the quicker they will receive these vital funds.
How Does A Small Business Owner Verify Eligibility?
As with many government programs, there are multiple qualifications, byzantine procedures, and at times, mountains of paperwork couched in legalese. For the average small business owner with limited knowledge, resources, and time, the act of simply applying for programs is daunting. However, savvy business owners know that they need an A-team of payroll, accounting, and other HR and business operations specialists to help them properly prepare and submit for vital government programs and loans.
Business Owners Need Help
With the help of business solution professionals, businesses can avoid miscalculations, errors in completing the correct forms for the ERC credits and submitting them promptly. How does a small or medium-sized company apply for and secure these valuable and much-needed benefits?
Payroll, employee benefits, accounting professionals, and other professionals that provide valuable advice and services to millions of businesses have never been more valuable. Knowledgeable, responsive, and experienced business service individuals can make a huge difference in a clients’ lives and the financial health of their businesses.
A recent report valued the fitness market at $35 billion. The fitness space, specifically the personal training and physical fitness businesses like gyms, were directly and severely impacted by the pandemic and state and local COVID restrictions. Millions of personal trainers, yoga studios, gyms, and other fitness facilities had to reduce capacity dramatically, lay off employees, and close. Some didn’t survive the hardships. Fitness facility owner’s and fitness professional’s losses were massive, and their options for continued operations were limited.
One such business directly and adversely affected by COVID shutdown orders was Faster Fitness, a small team of personal trainers with a facility located in St. Louis, Missouri. Their founder and owner, Marshall Ray, had to weather the shutdowns, retain his clients and employees, and transform his approach. It wasn’t easy, but he managed to survive and now is on the path to normal and slow growth.
Finding An A-Team of Business Professionals
Businesses of every size are seeking reliable, trusted, and knowledgeable partners and resources. They realize that they cannot focus on operating and growing their business without the assistance of business professionals.
Marshall, the owner of Faster Fitness, an innovative group of fitness professionals, became aware of the ERC by conducting his internet research. As he read the details of the program, He realized that he needed real answers and professional guidance, so he approached his payroll and benefits management team at the Missouri offices of AccuPay HCM.
Marshall had this to say about the ERC and his experience: “I found the ERC program through my web searches. I had already received two rounds of PPE, and that helped us get by. But, after reading about the ERC, it made me wonder if we might qualify. So, I reached out to my accountant during his peak season for taxes, and he thought we might be eligible for the ERC program but was too busy to help us. So, we turned to AccuPay, and they made it happen. We’ve been blessed to have good people advising us.”
And what’s his take on hiring business solutions professionals? He added this:” I reached out to my accountant on April 1st, which was a pretty busy time of year for obvious reasons. They told us that they didn’t have much experience with the ERC and couldn’t get to it until they were less busy.”
“So, I reached out to Cina (AccuPay HCM rep), and she told me that she had already made a few ERC submissions. She consulted with her team, and she had it done in a week. They needed some more documentation to complete the paperwork. They said they could help, told me what it would cost, then told me that I was approved, and now I’m just waiting for our check. It was surprisingly simple. The tax law is so complicated, so we were glad to have their help and expertise. They asked me easy-to-understand questions and made it less painful.”
And, finally, he had this advice to other business owners going at it alone:
“You’re going to save a tremendous amount of time and money by hiring an A-list of players. They (AccuPayHCM) saved us a lot of time, energy and they were much more efficient than we would be going at alone. I believe it’s essential to have a good team of trusted people—an attorney, an accountant, and a payroll/HR company. Maybe you don’t need all these folks on day one, but as you grow, it’s non-negotiable.”
Call Your A-Team
Jessica Hayes, director of finance for a midwestern payroll, onboarding, and business solutions company, AccuPay HCM, had several recommendations for businesses trying to determine their eligibility for the ERC.
Hayes said this: “We are seeing a much quicker turnaround for clients who file an original 941 return with the ERC Credit included on it versus those clients that have us go back after the fact and file an amended 941 return to claim the credit.”
Addressing the approaching deadlines, she added: “So 2nd quarter 941’s are due to be filed with the IRS by 7/31/2021, so we have until at least the week before that to include any ERC Credits available for 2nd quarter to include the credit on the original return. Turnaround time when having to file an amended return from the IRS is 90-120 days whereas when filing an original return, the turnaround is 30-60 days.”
She concluded, “The ERC program has been extended through 12/31/2021, so we have two more quarters that clients might qualify for before the program ends.”
Key Take Always and Plan For Business Owners Considering Filing For ERC Benefits:
- Determine ASAP if the company’s employees meet the ERC criteria
- Visit the IRS’ site at: https://www.irs.gov/coronavirus/employee-retention-credit
- Locate all payroll information for the last few years
- If one cannot determine eligibility or prepare the necessary 941’s to the IRS, contact a business solutions provider ASAP.
- Act now! Don’t delay assembling the required documentation and submitting it before the July 31st deadline.
These valuable benefits can help any qualifying company mitigate the deleterious effects of the pandemic and business shutdowns. Smart business owners take advantage of all assistance and ensure the profitability of their enterprise.