Lets talk first about Does The Employee Retention Credit Reduce Payroll Tax Expense :
Our group here what do these men doing everyone in this space is helping teach individuals about ERC and uh constantly supply a gorgeous breakfast and have individuals actually learn about the program we must head to the room 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 hundreds of millions of dollars so these are duplicate copies of the letters that go to customers verifying that the check is on the method I imply you know if you simply start to take a look at a few of these here I indicate this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I imply it’s just I suggest think about how many actual clients that went through the program yeah this is the very end this is the party at the end when the check is verified the numbers are validated and the check is on the mail in the mail from the IRS heading to the customer so that’s how you have the ability to track it you understand when you
get this you understand the check is gone for sure and that’s when they pay so they don’t pay anything up until they actually get the money they don’t pay bottom line Wonder trust anything until this letter is confirmed the check is on the way they deposit it into their savings account and they can really rely on Wonder trust that the process has been finished and how many you believe you have actually processed considering that you began this we have to do with 35 000 of these for
about six billion dollars wow so clearly they understand what they’re doing which’s what you need you need specialists on the other end of the phone to process this and get it to where you get among these that’s what matters all right Mr Fantastic here you’re at my YouTube channel we’re speaking about something actually essential today the staff member retention credit which the majority of you have actually never ever heard of I definitely had not become aware of it up until extremely just recently and found out a lot about it since this is probably the lowest cost of capital for any small business anywhere
anytime if you have employees between five and five hundred so I’ve got the professional with me this is Josh Fox he’s the founder and CEO of bottom line Principles they’re the largest processor of these ERC credits this is a 170 page program so it’s challenging this isn’t like PPP we just call up your bank supervisor and say provide 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’ve ended up being yes the Ambassador and paid representative for this I like this program it’s disappearing soon you got to learn all about it let’s talk employee retention credit Josh Fox what is an ERC let’s just begin there so during the Trump Administration when President Trump was enacted they came up with the cares Act and the cares act offered businesses three opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and practically everybody it makes a huge distinction right there 2 of them are loans and one’s a refund precisely so the ERC is a refund that’s.
fix the money cash payroll tax refund okay go on sorry I just have to ensure we got that point I indicate that’s a big difference a loan versus cash cash I like cash money that’s what we’re talking about alright 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 initial cares Act is the ERC and yes Kevin it is a gorgeous difficult check in the mail where you get real money from the IRS all right so let’s discuss how it works due to the fact that it seems like to me if it’s a if it’s staff member retention credit that individual needed to be a staff member so I’m going to make the Presumption this cash is not for the owner not for people on the cap table not for investors it’s for workers right you needed to have actually owned a company but it’s based on you having W-2 workers in America not 10.99. As long as you had W-2 employees and you paid federal payroll taxes that’s why you would be eligible so you have to be on payroll in 2020 on the W-2 and you have to be on payroll for the first six months of 2021 on the W-2 correct so there were 6 quarters the program was open well stroll us through the 6 quarters so you had quarters two three and 4 of 2020 and you had quarters one 2 and 3 of 2021. all right so that’s how it’s determined 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 6 quarters so the calculation in 2020 to be precise Kevin is 50 of the employee’s wage to an optimum of five thousand dollars per staff member for the year of 2020 and in 2021 the numbers escalated to 70 of the staff member’s wage to a maximum of seven thousand per quarter how did that take place um they simply changed the rules in.
2021 versus due to the fact that the turmoil of the pandemic so they wanted to even get more to keep those workers on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 approximately five thousand Max and after that what happens 21 000 Max in 2021 oh that’s how you come up with twenty six thousand twenty one thousand to twenty twenty one plus 5 thousand in twenty twenty that’s twenty six thousand dollars per staff member that is because that’s a lot of cash it is now there’s a caution here the PPP money would have to be minimized from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan two you would minimize the 26 000 so what we’re seeing usually Kevin is if you took PPP money someplace around 10 thousand dollars a person so let’s say hypothetically you owned a dining establishment in New york city City where I’m from and you had a hundred employees and you took PPP cash you would still get a million dollar in the mail from the IRS so it’s huge clearly now the big question is why does nobody know about this due to the fact that look when I first found out about this when I initially fulfilled Josh you know I’ve got lots of financial investments in lots of business I’m a significant advocate for entrepreneurship in America and make many lots of financial investments in business owners of which many suffered through the pandemic when I first heard about this I called BS I don’t believe it since I utilize the PPP we went through the money 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 used them wisely to survive throughout the pandemic so when I became aware of this I stated nah it can’t be true but when I dug around I even contacted us to my politician good friends Guv Senators they didn’t understand about it I indicate that’s how you understand 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 also not true so let’s ask Josh why does no one learn about the staff member retention credit you understand what’s intriguing you’re speaking about the banks Kevin due to the fact that in the PPP loan procedure the federal government made it very clear that if you desired a PPP loan you would call Wells Fargo Citibank Bank of America any of the big banks in our country and they would process process 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 actually done PPP you could refrain from doing ERC in the initial program and when they altered the law in 2021 the banks were refraining from doing ERC because 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 truly she or he’s never done it in the past do the banks do it nope the banks don’t do it the payroll companies yeah a few of them are doing it as a payroll business your accounting professional no your accountant’s never done this before unless you have an account that entered into this organization and bottom line my company Kevin has stayed in business considering that 2009 and we have actually been working with the federal government and the state government to recuperate cash for Fortune 500 Fortune 1000 business so a lot of our big huge business clients have dealt with bottom line to recuperate other government programs we have actually done sales tax and use tax joblessness tax work opportunity tax credits research and development tax credits unclaimed property property tax all of these other federal government programs.
The worker retention tax credit is a broad based refundable tax credit created to encourage.
companies to keep workers on their payroll. The credit is 50% of approximately $10,000 in incomes paid by an.
employer whose service is completely or partially suspended because of COVID-19 or whose gross invoices.
decline by more than 50%.
1. The credit is available to all companies despite size including tax exempt companies. There are.
only 2 exceptions: (1) state and local governments and their instrumentalities and (2) little.
services who take Small Business Loans.
2. To certify, the company needs to satisfy one of two alternative tests. The tests are computed each.
calendar quarter– Either.
o the company’s company is completely or partially suspended by federal government order due to COVID-19.
during the calendar quarter or.
o the employer’s gross invoices are below 50% of the comparable quarter in 2019. Once the.
employer’s gross invoices go above 80% of a similar quarter in 2019 they no longer qualify.
after the end of that quarter.
Computation of the Credit.
The amount of the credit is 50% of the certifying salaries paid up to $10,000 in overall.
It is effective for salaries paid after March 13th and before December 31, 2020.
The definition of certifying earnings varies by whether a company had, on average, more or less than.
100 workers in 2019.
Companies that specialize in ERC filing help generally supply knowledge and assistance to assist businesses navigate the complex procedure of declaring the credit. They can use different services, including:.
How is the employee retention credit calculated? Does The Employee Retention Credit Reduce Payroll Tax Expense
Eligibility Evaluation: These business will examine your company’s eligibility for the ERC based on factors such as your industry, profits, and operations. They can help identify if you meet the requirements for the credit and determine the maximum credit amount you can declare.
Paperwork and Estimation: ERC filing services will assist in gathering the needed documents, such as payroll records and financial statements, to support your claim. They will likewise assist calculate the credit quantity based on qualified wages and other qualifying expenditures.
Retroactive Claim Review: If you are eligible to claim the ERC for prior quarters, these companies can review your previous payroll records and financials to determine possible chances for retroactive credits. They can assist you amend prior income tax return to declare these refunds.
Filing Support: Companies focusing on ERC filings will prepare and submit the required kinds and documentation in your place. This consists of completing Form 941 or any other necessary tax forms.
Compliance and Updates: ERC guidelines and assistance have actually developed gradually. These business remain upgraded with the most recent modifications and ensure that your filings adhere to the most current standards. If the IRS requests extra details or performs an audit related to your ERC claim, they can likewise offer continuous support.
It is essential to research and vet any company using ERC filing support to guarantee their reliability and expertise. Try to find established firms with experience in tax and payroll services, or consider reaching out to trusted accounting firms or tax experts who provide ERC submitting assistance.
Bear in mind that while these business can provide important help, it’s constantly an excellent idea to have a basic understanding of the ERC requirements and procedure yourself. This will assist you make informed choices and make sure accurate filings.
The Employee Retention Credit (ERC) is a refundable tax credit introduced by the U.S. federal government as part of COVID-19 relief procedures. The goal of the ERC is to encourage organizations to maintain and pay their workers throughout the pandemic, even if their operations have actually been affected.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is available to qualified companies, consisting of for-profit companies, tax-exempt companies, and particular governmental entities. To certify, companies must fulfill one of two criteria:.
The business operations were completely or partly suspended due to a government order related to COVID-19.
The business experienced a considerable decline in gross invoices. As discussed previously, for 2021, a considerable decrease is defined as a 20% decrease in gross invoices compared to the very same quarter in 2019. For 2022 and beyond, a significant decrease is defined as a 20% decline in gross receipts compared to the exact same quarter in 2019, or a 20% decline in gross invoices 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 portion (as much as 70%) of certified salaries paid to staff members, consisting of certain health plan costs. The maximum credit per worker is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: Initially, companies that received an Income Security Program (PPP) loan were not qualified for the ERC. Legislation passed in late 2020 and extended in 2021 allows companies to declare the ERC even if they got a PPP loan. The very same salaries can not be used to claim both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has been retroactively expanded and enhanced, enabling qualified employers to claim the credit for qualified incomes paid as far back as March 13, 2020. This retroactive provision provides an opportunity for organizations to change prior-year income tax return and receive refunds.
Claiming the Credit: Companies can declare the ERC by reporting it on their employment tax returns, usually Type 941. The excess can be reimbursed to the employer if the credit exceeds the amount of work taxes owed.
It is necessary to note that the ERC arrangements and eligibility criteria have developed over time. The very best course of action is to talk to a tax professional or check out the official IRS site for the most current and comprehensive info regarding the ERC, consisting of any recent legal modifications or updates.
To get approved for the ERC, a service must satisfy among the following criteria:.
The business operations were completely or partly suspended due to a federal government order related to COVID-19.
Business experienced a considerable decline in gross receipts. For 2021, a significant decrease is defined as a 20% decrease in gross invoices compared to the exact same quarter in 2019. For 2022 and beyond, a significant decrease is specified as a 20% decrease in gross receipts compared to the exact same quarter in 2019, or a 20% decrease in gross invoices compared to the right away preceding quarter.
The ERC is readily available to companies of all sizes, including tax-exempt companies, but there are some exceptions. For instance, government entities and services that received a PPP loan might have limitations on declaring the credit.
The procedure for claiming the ERC involves completing the needed types and consisting of the credit on your employment income tax return (normally Kind 941). The exact time it requires to process the credit can vary based upon a number of elements, including the intricacy of your business and the work of the IRS. It’s recommended to seek advice from a tax professional for assistance particular to your scenario.
There are a number of companies that can assist with the process of claiming the ERC. Some widely known companies that use support with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young.
Please keep in mind that the information supplied here is based on general knowledge and may not show the most current updates or changes to the ERC. It is necessary to talk to a tax professional or go to the main IRS site for the most precise and current information regarding eligibility, declaring treatments, and readily available help.
Less than 100. The credit is based if the company had 100 or fewer employees on average in 2019.
on incomes paid to all employees whether they really worked or not. To put it simply, even if the.
workers worked full-time and made money for full time work, the employer still gets the credit.
Greater than 100. The credit is if the employer had more than 100 staff members on average in 2019.
allowed only for wages paid to staff members who did not work throughout the calendar quarter.
In both cases, “salaries” consists of not just money payments but also a part of the expense of company.
supplied health care. Does The Employee Retention Credit Reduce Payroll Tax Expense
Employers can be instantly compensated for the credit by lowering the quantity of payroll taxes they.