Lets talk first about Are Shareholder Wages Eligible For Employee Retention Credit :
Our group here what do these guys doing everyone in this space is assisting teach people about ERC and uh constantly offer a beautiful breakfast and have people really discover the program we need to head to the room where we are able to display a few of the checks that we are getting for companies and I wish to see that what is this this is uh numerous millions of dollars literally Kevin numerous countless dollars so these are replicate copies of the letters that go to clients validating that the check is on the way I mean you understand if you simply begin to take a look at some of these here I indicate this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I indicate it’s simply I indicate think of the number of real customers that went through the program yeah this is the very end this is the party at the end when the check is validated the numbers are validated and the check is on the mail in the mail from the IRS 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 opted for sure which’s when they pay so they don’t pay anything until they really receive the cash they do not pay bottom line Wonder trust anything until this letter is verified the check is on the method they transfer it into their bank account and they can really rely on Wonder trust that the procedure has actually been completed and the number of you think you’ve processed considering that you started this we’re about 35 000 of these for
about six billion dollars wow so clearly they understand 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 Terrific here you’re at my YouTube channel we’re discussing something actually essential today the worker retention credit which most of you have never ever become aware of I definitely hadn’t become aware of it until very recently and discovered a lot about it due to the fact that this is most likely the most affordable expense of capital for any small business anywhere
anytime if you have workers between five and five hundred so I’ve got the specialist with me this is Josh Fox he’s the founder and CEO of bottom line Concepts 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 simply call up your bank supervisor and state give me a loan it does not 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 enjoy this program it’s going away soon you got to learn all about it let’s talk worker retention credit Josh Fox what is an ERC let’s simply start there so throughout the Trump Administration when President Trump was enacted they developed the cares Act and the cares act provided businesses three opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and practically everyone 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.
correct the money cash payroll tax refund okay go on sorry I simply have to ensure we got that point I indicate that’s a big distinction a loan versus cash cash I like cash cash that’s what we’re talking 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 initial cares Act is the ERC and yes Kevin it is a lovely difficult check in the mail where you get real cash from the IRS all right so let’s discuss how it works because it seems like to me if it’s a if it’s employee retention credit that person had to be an employee so I’m going to make the Assumption this money is not for the owner not for people on the cap table not for shareholders it’s for staff members right you needed to have owned a company but it’s based upon you having W-2 workers in America not 10.99. so as long as you had W-2 employees 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 have to be on payroll for the very first 6 months of 2021 on the W-2 right so there were six quarters the program was open well stroll us through the 6 quarters so you had quarters two three and four of 2020 and you had quarters one 2 and three of 2021. alright so that’s how it’s measured you need to be on the W-2 during that period now let’s talk my favorite part money just how much can you get back per worker that was on a W-2 in those 6 quarters so the calculation in 2020 to be exact Kevin is 50 of the employee’s wage to a maximum 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 an optimum of 7 thousand per quarter how did that take place um they just altered the rules in.
2021 versus due to the fact that the turmoil of the pandemic so they wished 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 as much as five thousand Max and then what occurs 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 because that’s a great deal of cash it is now there’s a caution here the PPP money would need to be decreased from the twenty six thousand dollars so if you took PPP loan one and PPP loan two you would minimize the 26 000 so what we’re seeing typically Kevin is if you took PPP money someplace around ten 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 undoubtedly now the huge concern is why does no one know about this because look when I initially heard about this when I first fulfilled Josh you understand I have actually got great deals of financial investments in great deals of business I’m a major advocate for entrepreneurship in America and make many numerous financial investments in entrepreneurs of which lots of suffered through the pandemic when I first found out about this I called BS I don’t believe it because I utilize 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 and that were well should have and we utilized them wisely to survive during the pandemic so when I found out about this I stated nah it can’t be true but when I dug around I even called to my politician pals Guv Senators they didn’t know about it I indicate that’s how you understand that’s how misinformation is that there’s no details out there then a bunch of people told me well you can’t get it because you took the PPP likewise 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 since in the PPP loan procedure the federal government made it extremely clear that if you wanted a PPP loan you would call Wells Fargo Citibank Bank of America any of the big banks in our country and they would process procedure in Canada a pre-pp loan there’s no loans in Canada by the way it’s just process procedure that’s all um and here there was chaos due to the fact that keep in mind in the initial cares act you might refrain from doing both programs so if you had done PPP you could 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 anybody about how to.
do this does your CFO know how to do this not really he or she’s never done it previously 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 company your accountant no your accounting professional’s never done this before unless you have an account that entered into this company and bottom line my firm Kevin has stayed in business given that 2009 and we have actually been dealing with the federal government and the state federal government to recover cash for Fortune 500 Fortune 1000 companies so a great deal of our huge big business clients have actually worked with bottom line to recuperate other government programs we have actually done sales tax and utilize tax unemployment tax work opportunity tax credits research and development tax credits unclaimed home real estate tax all of these other government programs.
The worker retention tax credit is a broad based refundable tax credit created to motivate.
employers to keep staff members on their payroll. The credit is 50% of up to $10,000 in incomes paid by an.
company whose organization is totally or partly suspended because of COVID-19 or whose gross receipts.
decline by more than 50%.
1. The credit is available to all companies regardless of size including tax exempt companies. There are.
just 2 exceptions: (1) state and local governments and their instrumentalities and (2) small.
services who take Small Business Loans.
2. To qualify, the employer needs to fulfill one of two alternative tests. The tests are determined each.
calendar quarter– Either.
o the employer’s business is fully or partly suspended by federal government order due to COVID-19.
during the calendar quarter or.
o the employer’s gross invoices are listed below 50% of the comparable quarter in 2019. When the.
employer’s gross invoices go above 80% of an equivalent quarter in 2019 they no longer certify.
after the end of that quarter.
Estimation of the Credit.
The amount of the credit is 50% of the certifying salaries paid up to $10,000 in total.
It is effective for salaries paid after March 13th and before December 31, 2020.
The meaning of certifying earnings varies by whether a company had, on average, more or less than.
100 staff members in 2019.
Companies that focus on ERC filing support typically supply expertise and assistance to assist services browse the intricate procedure of claiming the credit. They can use numerous services, consisting of:.
How is the employee retention credit calculated? Are Shareholder Wages Eligible For Employee Retention Credit
Eligibility Assessment: These companies will examine your organization’s eligibility for the ERC based upon aspects such as your market, revenue, and operations. If you meet the requirements for the credit and determine the maximum credit amount you can declare, they can help identify.
Paperwork and Calculation: ERC filing services will help in gathering the essential paperwork, such as payroll records and financial declarations, to support your claim. They will also assist determine the credit quantity based on qualified incomes and other certifying costs.
Retroactive Claim Evaluation: If you are qualified to claim the ERC for prior quarters, these business can examine your previous payroll records and financials to identify prospective chances for retroactive credits. They can help you amend prior income tax return to claim these refunds.
Filing Assistance: Business focusing on ERC filings will prepare and submit the essential forms and documents on your behalf. This consists of finishing Type 941 or any other necessary tax return.
Compliance and Updates: ERC policies and guidance have actually progressed in time. These business remain updated with the latest modifications and ensure that your filings abide by the most present standards. If the Internal revenue service requests additional info or carries out an audit related to your ERC claim, they can also provide ongoing assistance.
It is very important to research study and veterinarian any business providing ERC filing assistance to ensure their trustworthiness and proficiency. Look for recognized companies with experience in tax and payroll services, or think about connecting to trusted accounting firms or tax specialists who use ERC submitting support.
Bear in mind that while these companies can provide important support, it’s constantly a great idea to have a basic understanding of the ERC requirements and procedure yourself. This will assist you make informed choices and ensure precise filings.
The Worker Retention Credit (ERC) is a refundable tax credit introduced by the U.S. government as part of COVID-19 relief steps. The objective of the ERC is to encourage companies to retain and pay their staff members during the pandemic, even if their operations have been affected.
Here are some key points about the ERC:.
Eligibility: The ERC is offered to qualified companies, including for-profit companies, tax-exempt companies, and particular governmental entities. To certify, companies need to meet one of two criteria:.
Business operations were totally or partly suspended due to a federal government order related to COVID-19.
Business experienced a considerable decrease in gross invoices. As pointed out earlier, for 2021, a substantial decrease is specified as a 20% decrease in gross invoices compared to the exact same quarter in 2019. For 2022 and beyond, a considerable decline is defined as a 20% decrease in gross receipts compared to the same quarter in 2019, or a 20% decline in gross invoices compared to the instantly preceding quarter.
Credit Amount: The ERC is a refundable tax credit that offsets the company’s share of Social Security taxes. The credit amount is equal to a portion (approximately 70%) of certified salaries paid to employees, consisting of certain health plan expenditures. The maximum credit per employee is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: At first, organizations that got an Income Defense Program (PPP) loan were not qualified for the ERC. Legislation passed in late 2020 and extended in 2021 allows businesses to claim the ERC even if they received a PPP loan. Nevertheless, the very same incomes can not be utilized to claim both the PPP loan forgiveness and the ERC.
Retroactive Provision: The ERC has actually been retroactively expanded and enhanced, allowing eligible employers to claim the credit for certified salaries paid as far back as March 13, 2020. This retroactive provision provides an opportunity for businesses to change prior-year income tax return and receive refunds.
Claiming the Credit: Companies can declare the ERC by reporting it on their employment income tax return, generally Kind 941. If the credit goes beyond the amount of work taxes owed, the excess can be refunded to the employer.
It is necessary to note that the ERC arrangements and eligibility criteria have actually developed over time. The best course of action is to consult with a tax professional or go to the official internal revenue service website for the most comprehensive and current details regarding the ERC, consisting of any current legislative modifications or updates.
To receive the ERC, a business must fulfill one of the following criteria:.
The business operations were fully or partially suspended due to a government order related to COVID-19.
Business experienced a considerable decline in gross receipts. For 2021, a substantial decline is defined as a 20% decline in gross invoices compared to the very same quarter in 2019. For 2022 and beyond, a significant decrease is specified as a 20% decline in gross receipts compared to the exact same quarter in 2019, or a 20% decline in gross receipts compared to the instantly preceding quarter.
The ERC is offered to organizations of all sizes, including tax-exempt companies, however there are some exceptions. For example, federal government entities and businesses that got a PPP loan might have constraints on declaring the credit.
The process for declaring the ERC involves completing the required types and including the credit on your employment income tax return (usually Type 941). The exact time it requires to process the credit can differ based on a number of factors, consisting of the complexity of your company and the work of the IRS. It’s suggested to consult with a tax professional for guidance specific to your scenario.
There are numerous business that can assist with the procedure of declaring the ERC. These consist of accounting firms, tax advisory services, and payroll service providers. Some well-known business that offer support with ERC claims consist of ADP, Paychex, Deloitte, and Ernst & Young. It’s recommended to research study and get in touch with these business directly to ask about their charges and services.
Please keep in mind that the info offered here is based on basic understanding and might not reflect the most current updates or changes to the ERC. It is very important to talk to a tax expert or check out the official IRS website for the most accurate and up-to-date info concerning eligibility, claiming procedures, and readily available support.
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 really worked or not. In other words, even if the.
employees worked full-time and got paid for full-time work, the company still gets the credit.
Greater than 100. If the company had more than 100 staff members on average in 2019, then the credit is.
permitted only for earnings paid to staff members who did not work during the calendar quarter.
In both cases, “wages” includes not just cash payments however likewise a part of the expense of employer.
supplied health care. Are Shareholder Wages Eligible For Employee Retention Credit
Companies can be immediately reimbursed for the credit by reducing the quantity of payroll taxes they.