Lets talk first about Employee Retention Credit Journal Entry :
Our team here what do these guys doing everybody in this room is assisting teach individuals about ERC and uh constantly offer a beautiful breakfast and have individuals actually discover the program we ought to head to the room where we are able to display a few of the checks that we are getting for business and I wish to see that what is this this is uh hundreds of millions of dollars actually Kevin hundreds of millions of dollars so these are replicate copies of the letters that go to clients verifying that the check is on the method I indicate you understand if you just 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 imply it’s simply I suggest consider the number of actual customers that went through the program yeah this is the very end this is the celebration at the end when the check is verified the numbers are verified and the check is on the mail in the mail from the IRS heading to the consumer so that’s how you’re able to track it you know when you
get this you know the check is gone for sure and that’s when they pay so they don’t pay anything till they actually receive the money they don’t pay bottom line Wonder trust anything till this letter is verified the check is on the way they deposit it into their bank account and they can truly trust Wonder trust that the process has been completed and how many you think you’ve processed since you began this we have to do with 35 000 of these for
about 6 billion dollars wow so clearly they understand what they’re doing which’s what you need you require 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 discussing something actually essential today the worker retention credit which the majority of you have actually never ever become aware of I definitely hadn’t heard of it till really just recently and learned a lot about it since this is probably the lowest cost of capital for any small company anywhere
anytime if you have employees between five and five hundred so I’ve got the specialist with me this is Josh Fox he’s the creator and CEO of bottom line Principles they’re the biggest processor of these ERC credits this is a 170 page program so it’s hard this isn’t like PPP we simply phone your bank supervisor and say offer me a loan it does not work there’s not a loan it’s an application and Josh is going to inform us all about it and how to get it and why I’ve ended up being yes the Ambassador and paid representative for this I enjoy this program it’s disappearing very soon you got to learn all about it let’s talk worker retention credit Josh Fox what is an ERC let’s simply begin there so during the Trump Administration when President Trump was enacted they created the cares Act and the cares act provided businesses 3 opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and almost 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.
correct the cash money payroll tax refund alright go on sorry I just have to make certain we got that point I indicate that’s a big difference a loan versus money cash I like money cash that’s what we’re speaking 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 hard check in the mail where you get actual money from the IRS all right so let’s speak about how it works because it seems like to me if it’s a if it’s staff member retention credit that individual had to be an employee so I’m going to make the Presumption this cash is not for the owner not for individuals on the cap table not for shareholders it’s for staff members right you needed to have owned a service however it’s based on you having W-2 workers 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 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 appropriate so there were 6 quarters the program was open well walk us through the 6 quarters so you had quarters two 3 and four of 2020 and you had quarters one 2 and three of 2021. all right so that’s how it’s measured you have to be on the W-2 throughout that period now let’s talk my preferred part cash just how much can you get back per worker that was on a W-2 in those 6 quarters so the estimation in 2020 to be exact Kevin is 50 of the staff member’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 employee’s income to an optimum of 7 thousand per quarter how did that occur um they simply altered the rules in.
2021 versus because 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 as much as five thousand Max and after that what occurs 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 6 thousand dollars per employee that is since that’s a great deal of money 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 reduce 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 restaurant in New York 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 substantial obviously now the big concern is why does no one understand about this due to the fact that look when I initially became aware of this when I first met Josh you understand I’ve got great deals of investments in lots of companies I’m a significant supporter for entrepreneurship in America and make many many investments in business owners of which many suffered through the pandemic when I initially became aware of this I called BS I do not think it since I utilize 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 and that were well deserved and we utilized them wisely to survive during the pandemic so when I heard about this I stated nah it can’t hold true but when I dug around I even contacted us to my politician buddies Guv Senators they didn’t learn about it I mean that’s how you understand 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 because you took the PPP likewise not true so let’s ask Josh why does nobody learn about the worker retention credit you know what’s intriguing you’re speaking about the banks Kevin because in the PPP loan process the federal government made it very 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 turmoil because keep in mind in the original cares act you could refrain from doing both programs so if you had actually done PPP you might refrain from doing ERC in the original program and when they changed the law in 2021 the banks were refraining from doing ERC due to the fact that it’s not alone so you’re getting a tax refund so the government never made it clear to anybody about how to.
do this does your CFO know how to do this not actually he or she’s never ever 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 accounting professional’s never ever done this before unless you have an account that went into this organization and bottom line my company Kevin has been in business because 2009 and we’ve been dealing with the federal government and the state federal government to recover money for Fortune 500 Fortune 1000 business so a great deal of our big huge business clients have actually worked with bottom line to recuperate other federal government programs we have actually done sales tax and utilize tax joblessness tax work opportunity tax credits research and development tax credits unclaimed property real estate tax all of these other federal government programs.
The staff member retention tax credit is a broad based refundable tax credit designed to motivate.
employers to keep workers on their payroll. The credit is 50% of approximately $10,000 in wages paid by an.
employer whose company is completely or partly suspended because of COVID-19 or whose gross invoices.
decrease by more than 50%.
Schedule.
1. The credit is readily available to all employers no matter size consisting of tax exempt organizations. There are.
just 2 exceptions: (1) state and local governments and their instrumentalities and (2) little.
businesses who take Small Business Loans.
2. To certify, the employer has to satisfy one of two alternative tests. The tests are determined each.
calendar quarter– Either.
o the employer’s service is completely or partly suspended by government order due to COVID-19.
throughout the calendar quarter or.
o the company’s gross receipts are below 50% of the similar quarter in 2019. As soon as the.
employer’s gross receipts exceed 80% of a similar 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 incomes paid up to $10,000 in overall.
It works for earnings paid after March 13th and prior to December 31, 2020.
The definition of certifying earnings differs by whether a company had, usually, more or less than.
100 workers in 2019.
Business that specialize in ERC filing support usually provide knowledge and support to assist services navigate the complex procedure of claiming the credit. They can offer various services, consisting of:.
How is the employee retention credit calculated? Employee Retention Credit Journal Entry
Eligibility Assessment: These companies will assess your business’s eligibility for the ERC based upon elements such as your market, revenue, and operations. If you satisfy the requirements for the credit and recognize the optimum credit amount you can claim, they can assist determine.
Documents and Calculation: ERC filing services will assist in collecting the necessary paperwork, such as payroll records and financial declarations, to support your claim. They will also assist calculate the credit amount based on eligible incomes and other certifying expenditures.
Retroactive Claim Review: If you are eligible to declare the ERC for prior quarters, these business can examine your previous payroll records and financials to recognize possible chances for retroactive credits. They can assist you change prior income tax return to declare these refunds.
Filing Support: Companies focusing on ERC filings will prepare and send the necessary forms and paperwork on your behalf. This includes finishing Kind 941 or any other required tax return.
Compliance and Updates: ERC regulations and assistance have developed with time. These companies stay updated with the most recent modifications and ensure that your filings comply with the most current guidelines. They can also offer ongoing support if the internal revenue service demands additional info or performs an audit related to your ERC claim.
It’s important to research study and veterinarian any company offering ERC filing assistance to guarantee their credibility and knowledge. Try to find established firms with experience in tax and payroll services, or think about connecting to trusted accounting firms or tax professionals who provide ERC filing support.
Bear in mind that while these companies can supply valuable assistance, it’s constantly a great idea to have a basic understanding of the ERC requirements and procedure yourself. This will help you make informed decisions and guarantee precise filings.
The Staff Member Retention Credit (ERC) is a refundable tax credit introduced by the U.S. federal government as part of COVID-19 relief measures. The objective of the ERC is to encourage organizations to retain and pay their workers during the pandemic, even if their operations have actually been affected.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is readily available to eligible employers, consisting of for-profit organizations, tax-exempt companies, and certain governmental entities. To qualify, companies need to satisfy one of two criteria:.
The business operations were totally or partially suspended due to a government order related to COVID-19.
The business experienced a significant decline in gross invoices. As mentioned earlier, for 2021, a substantial decline is defined as a 20% decline in gross receipts compared to the exact same quarter in 2019. For 2022 and beyond, a considerable decrease is defined as a 20% decrease in gross invoices compared to the same quarter in 2019, or a 20% decline in gross invoices compared to the immediately preceding quarter.
Credit Quantity: The ERC is a refundable tax credit that offsets the company’s share of Social Security taxes. The credit quantity is equal to a percentage (up to 70%) of certified earnings paid to workers, consisting of certain 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: At first, organizations that received an Income Protection Program (PPP) loan were not qualified for the ERC. However, legislation passed in late 2020 and extended in 2021 permits organizations to declare the ERC even if they got a PPP loan. The same earnings can not be used to claim both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has actually been retroactively broadened and enhanced, permitting qualified companies to claim the credit for qualified wages paid as far back as March 13, 2020. This retroactive provision supplies a chance for services to amend prior-year tax returns and get refunds.
Declaring the Credit: Employers can declare the ERC by reporting it on their work income tax return, usually Form 941. The excess can be reimbursed to the employer if the credit surpasses the amount of employment taxes owed.
It is necessary to note that the ERC arrangements and eligibility requirements have evolved over time. The very best course of action is to speak with a tax expert or go to the official IRS site for the most comprehensive and updated information concerning the ERC, consisting of any current legislative modifications or updates.
To receive the ERC, a business should fulfill one of the following requirements:.
Business operations were totally or partially suspended due to a federal government order related to COVID-19.
The business experienced a substantial decrease in gross invoices. For 2021, a substantial decline is specified as a 20% decrease in gross invoices compared to the exact same quarter in 2019. For 2022 and beyond, a substantial decline is defined as a 20% decrease in gross receipts compared to the very same quarter in 2019, or a 20% decrease in gross invoices compared to the instantly preceding quarter.
The ERC is readily available to companies of all sizes, including tax-exempt companies, but there are some exceptions. For instance, federal government entities and companies that got a PPP loan might have restrictions on claiming the credit.
The process for claiming the ERC includes finishing the needed kinds and consisting of the credit on your work income tax return (usually Type 941). The exact time it takes to process the credit can vary based upon a number of aspects, consisting of the complexity of your company and the workload of the internal revenue service. It’s recommended to talk to a tax professional for assistance specific to your circumstance.
There are several companies that can help with the process of claiming the ERC. These include accounting firms, tax advisory services, and payroll company. Some well-known companies that use support with ERC claims consist of ADP, Paychex, Deloitte, and Ernst & Young. It’s advisable to research study and contact these companies straight to inquire about their costs and services.
Please note that the details offered here is based upon basic knowledge and may not show the most recent updates or modifications to the ERC. It is very important to seek advice from a tax professional or go to the official internal revenue service website for the most current and accurate information concerning eligibility, claiming procedures, and offered help.
Less than 100. The credit is based if the employer had 100 or less staff members on average in 2019.
on wages paid to all employees whether they really worked or not. To put it simply, even if the.
employees worked full time and made money for full time work, the company still gets the credit.
Greater than 100. The credit is if the company had more than 100 staff members on average in 2019.
permitted just for incomes paid to employees who did not work during the calendar quarter.
In both cases, “earnings” consists of not just cash payments but likewise a portion of the cost of employer.
offered healthcare. Employee Retention Credit Journal Entry
Payment.
Companies can be immediately reimbursed for the credit by reducing the quantity of payroll taxes they.