Lets talk first about Gaap Accounting For Employee Retention Credit :
Our group here what do these men doing everyone in this space is helping teach people about ERC and uh always offer a beautiful breakfast and have people actually discover the program we should head to the room where we are able to show some of the checks that we are getting for companies and I ‘d like to see that what is this this is uh numerous millions of dollars actually Kevin hundreds of millions of dollars so these are duplicate copies of the letters that go to clients verifying that the check is on the method I mean you know if you just begin to 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 suggest it’s simply I indicate 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 validated 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’re able to track it you understand when you
get this you know the check is opted for sure and that’s when they pay so they do not pay anything up until they actually get the cash they don’t pay bottom line Wonder trust anything till this letter is confirmed the check is on the method they deposit it into their savings account and they can really trust Wonder trust that the process has actually been completed 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 know what they’re doing and that’s what you require you require professionals 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 speaking about something actually essential today the employee retention credit which the majority of you have never become aware of I certainly hadn’t become aware of it up until extremely recently and learned a lot about it since this is most likely the lowest cost of capital for any small business anywhere
anytime if you have employees between five and five hundred so I have actually got the specialist with me this is Josh Fox he’s the founder and CEO of bottom line Concepts 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 give me a loan it doesn’t work there’s not a loan it’s an application and Josh is going to tell us all about it and how to get it and why I have actually become yes the Ambassador and paid representative for this I love this program it’s disappearing very soon you got to discover everything about it let’s talk staff member retention credit Josh Fox what is an ERC let’s simply begin there so throughout the Trump Administration when President Trump was enacted they developed the cares Act and the cares act used organizations 3 chances you had the PPP loan you had the eidl loan and you had the ERC tax refund and almost everybody it makes a huge difference right there two of them are loans and one’s a refund exactly so the ERC is a refund that’s.
correct the money cash payroll tax refund okay go on sorry I just need to make certain we got that point I indicate that’s a huge difference a loan versus cash cash I like cash money that’s what we’re speaking about all right 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 beautiful difficult check in the mail where you get actual cash from the IRS all right so let’s discuss how it works because it sounds 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 Assumption this money is not for the owner not for people on the cap table not for investors it’s for employees right you needed to have actually owned a company but it’s based upon you having W-2 workers in America not 10.99. 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 very first six months of 2021 on the W-2 appropriate so there were 6 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 2 and three of 2021. okay 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 how much can you get back per worker that was on a W-2 in those 6 quarters so the computation in 2020 to be precise Kevin is 50 of the worker’s salary to a maximum of 5 thousand dollars per staff member for the year of 2020 and in 2021 the numbers skyrocketed to 70 of the worker’s wage to a maximum of seven thousand per quarter how did that happen um they just changed the rules in.
2021 versus due to the fact that the mayhem of the pandemic so they wanted to even get more to keep those employees on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 as much as 5 thousand Max and after that 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 worker that is since that’s a great deal of money it is now there’s a caution here the PPP cash would have to be decreased from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan two you would decrease the 26 000 so what we’re seeing typically Kevin is if you took PPP cash somewhere around 10 thousand dollars an individual so let’s state hypothetically you owned a restaurant in New york city City where I’m from and you had a hundred employees and you took PPP money you would still get a million dollar in the mail from the IRS so it’s substantial certainly now the huge question is why does no one learn about this since look when I first became aware of this when I first met Josh you understand I’ve got great deals of financial investments in great deals of companies I’m a significant advocate for entrepreneurship in America and make numerous lots of financial investments in business owners of which many suffered through the pandemic when I first became aware of this I called BS I do not believe it since I use the PPP we went through the money 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 been worthy of and we used them sensibly to stay alive during the pandemic so when I became aware of this I said nah it can’t hold true but when I dug around I even called to my politician buddies Governor Senators they didn’t learn about it I suggest that’s how you know that’s how misinformation is that there’s no info out there then a lot 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 learn about the employee retention credit you know what’s fascinating you’re talking about the banks Kevin since in the PPP loan process the federal government made it extremely clear that if you desired a PPP loan you would call Wells Fargo Citibank Bank of America any of the huge 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 just process process that’s all um and here there was turmoil due to the fact that keep in mind in the initial cares act you could refrain from doing both programs so if you had done PPP you might not do ERC in the initial program and when they altered 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 anyone about how to.
do this does your CFO understand how to do this not really she or he’s never ever done it before do the banks do it nope the banks do not do it the payroll business yeah a few of them are doing it as a payroll business your accounting professional no your accountant’s never done this prior to unless you have an account that went into this business and bottom line my firm Kevin has stayed in business given that 2009 and we’ve been dealing with the federal government and the state government to recuperate cash for Fortune 500 Fortune 1000 business so a lot of our huge huge business clients have actually worked 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 home real estate tax all of these other federal government programs.
The employee retention tax credit is a broad based refundable tax credit designed to encourage.
companies to keep staff members on their payroll. The credit is 50% of up to $10,000 in wages paid by an.
employer whose service is fully or partly suspended because of COVID-19 or whose gross invoices.
decline by more than 50%.
1. The credit is readily available to all companies despite size including tax exempt organizations. There are.
just 2 exceptions: (1) state and city governments and their instrumentalities and (2) small.
organizations who take Small company Loans.
2. To certify, the company has to satisfy one of two alternative tests. The tests are computed each.
calendar quarter– Either.
o the employer’s company is fully or partly suspended by 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.
company’s gross receipts exceed 80% of an equivalent quarter in 2019 they no longer qualify.
after completion of that quarter.
Calculation of the Credit.
The quantity of the credit is 50% of the certifying earnings paid up to $10,000 in overall.
It is effective for incomes paid after March 13th and prior to December 31, 2020.
The definition of qualifying salaries varies by whether a company had, on average, more or less than.
100 employees in 2019.
Companies that specialize in ERC filing support normally offer expertise and assistance to assist services navigate the complex process of claiming the credit. They can provide numerous services, consisting of:.
How is the employee retention credit calculated? Gaap Accounting For Employee Retention Credit
Eligibility Assessment: These business will examine your company’s eligibility for the ERC based upon factors such as your industry, profits, and operations. They can assist identify if you fulfill the requirements for the credit and recognize the optimum credit amount you can claim.
Documentation and Calculation: ERC filing services will help in collecting the necessary documentation, such as payroll records and financial declarations, to support your claim. They will also assist calculate the credit amount based upon qualified incomes and other qualifying costs.
Retroactive Claim Review: If you are eligible to claim the ERC for previous quarters, these business can evaluate your past payroll records and financials to recognize potential opportunities for retroactive credits. They can assist you amend prior income tax return to claim these refunds.
Filing Support: Companies specializing in ERC filings will prepare and submit the essential types and paperwork in your place. This includes finishing Kind 941 or any other necessary tax return.
Compliance and Updates: ERC guidelines and guidance have actually evolved gradually. These companies stay updated with the most recent changes and ensure that your filings adhere to the most existing standards. If the IRS requests additional information or conducts an audit associated to your ERC claim, they can likewise supply continuous support.
It is essential to research and veterinarian any business using ERC filing help to guarantee their reliability and proficiency. Try to find established firms with experience in tax and payroll services, or consider reaching out to relied on accounting firms or tax specialists who provide ERC submitting support.
Bear in mind that while these companies can supply 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 notified choices and make sure precise filings.
The Staff Member Retention Credit (ERC) is a refundable tax credit introduced by the U.S. government as part of COVID-19 relief measures. The objective of the ERC is to motivate businesses to retain and pay their employees during the pandemic, even if their operations have actually been impacted.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is available to qualified companies, consisting of for-profit companies, tax-exempt organizations, and certain governmental entities. To certify, employers should fulfill one of two requirements:.
The business operations were fully or partially suspended due to a government order related to COVID-19.
Business experienced a considerable decrease in gross receipts. As discussed previously, for 2021, a substantial decline is specified as a 20% decrease in gross receipts compared to the same quarter in 2019. For 2022 and beyond, a significant decrease 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 instantly preceding quarter.
Credit Amount: The ERC is a refundable tax credit that offsets the company’s share of Social Security taxes. The credit quantity amounts to a percentage (up to 70%) of certified wages paid to staff members, consisting of certain health plan expenses. The maximum 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, businesses that got a Paycheck Protection Program (PPP) loan were not qualified for the ERC. Legislation passed in late 2020 and extended in 2021 allows services to declare the ERC even if they got a PPP loan. The exact same salaries can not be used to declare both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has actually been retroactively expanded and boosted, permitting qualified employers to claim the credit for certified earnings paid as far back as March 13, 2020. This retroactive provision provides an opportunity for organizations to change prior-year tax returns and receive refunds.
Declaring the Credit: Employers can declare the ERC by reporting it on their employment income tax return, usually Type 941. The excess can be reimbursed to the employer if the credit exceeds the quantity of employment taxes owed.
It is essential to note that the ERC provisions and eligibility requirements have evolved in time. The best strategy is to seek advice from a tax professional or visit the official internal revenue service site for the most detailed and updated information relating to the ERC, consisting of any recent legislative modifications or updates.
To qualify for the ERC, a service must fulfill one of the following criteria:.
Business operations were fully or partially suspended due to a federal government order related to COVID-19.
Business experienced a substantial decline in gross receipts. For 2021, a significant decrease is specified as a 20% decline in gross invoices compared to the exact same quarter in 2019. For 2022 and beyond, a significant decrease is specified as a 20% decline in gross receipts compared to the very same quarter in 2019, or a 20% decline in gross invoices compared to the immediately preceding quarter.
The ERC is available to organizations of all sizes, including tax-exempt organizations, however there are some exceptions. For example, federal government entities and companies that got a PPP loan may have restrictions on declaring the credit.
The process for declaring the ERC involves completing the necessary forms and consisting of the credit on your work income tax return (usually Form 941). The exact time it requires to process the credit can differ based on several elements, consisting of the intricacy of your organization and the work of the IRS. It’s recommended to seek advice from a tax expert for assistance particular to your situation.
There are several companies that can help with the procedure of declaring the ERC. These consist of accounting firms, tax advisory services, and payroll provider. Some popular business that use support with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young. It’s suggested to research study and get in touch with these business directly to ask about their costs and services.
Please keep in mind that the details supplied here is based on general knowledge and might not show the most current updates or modifications to the ERC. It’s important to speak with a tax professional or go to the official IRS website for the most up-to-date and precise details 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 salaries paid to all staff members whether they really worked or not. In other words, even if the.
employees worked full time and earned money for full time work, the employer 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 just for incomes paid to employees who did not work during the calendar quarter.
In both cases, “wages” consists of not just money payments however likewise a part of the cost of company.
offered health care. Gaap Accounting For Employee Retention Credit
Companies can be immediately compensated for the credit by minimizing the quantity of payroll taxes they.