Lets talk first about How To Account For The Employee Retention Credit :
Our group here what do these men doing everybody in this room is helping teach people about ERC and uh always supply a gorgeous breakfast and have people really learn about the program we ought to head to the space where we have the ability to display a few of the checks that we are getting for business and I ‘d like to see that what is this this is uh numerous countless dollars literally Kevin numerous millions of dollars so these are duplicate copies of the letters that go to clients verifying that the check is on the method I imply you understand if you just begin to take a look at some of these here I suggest this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I indicate it’s simply I suggest consider the number of real clients 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 internal revenue service heading to the customer so that’s how you have the ability to track it you know when you
get this you know the check is chosen sure which’s when they pay so they do not pay anything until they in fact receive the money they don’t pay bottom line Wonder trust anything until this letter is confirmed the check is on the method they transfer it into their checking account and they can really rely on Wonder trust that the process has been ended up and the number of you think you’ve processed since you began this we’re about 35 000 of these for
about 6 billion dollars wow so clearly they understand what they’re doing and that’s what you require you need 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 Fantastic here you’re at my YouTube channel we’re speaking about something really essential today the worker retention credit which most of you have never ever heard of I definitely had not become aware of it until very just recently and discovered a lot about it because this is most likely the lowest expense of capital for any small business 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 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 hard this isn’t like PPP we just call up your bank supervisor and say give me a loan it does not 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 ended up being yes the Ambassador and paid representative for this I like this program it’s disappearing soon you got to find out 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 came up with the cares Act and the cares act provided businesses 3 chances you had the PPP loan you had the eidl loan and you had the ERC tax refund and nearly everyone it makes a big distinction right there two of them are loans and one’s a refund precisely so the ERC is a refund that’s.
correct the money money payroll tax refund okay go on sorry I just have to make sure we got that point I mean that’s a big distinction a loan versus money cash I like money money that’s what we’re speaking about fine 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 original cares Act is the ERC and yes Kevin it is a stunning tough check in the mail where you get real cash from the IRS all right so let’s speak about how it works because it sounds like to me if it’s a if it’s staff member retention credit that person had to be a worker 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 staff members right you needed to have actually owned an organization but 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 qualified so you need to be on payroll in 2020 on the W-2 and you need to be on payroll for the first six months of 2021 on the W-2 proper so there were 6 quarters the program was open well walk us through the 6 quarters so you had quarters 2 3 and 4 of 2020 and you had quarters one 2 and three of 2021. okay so that’s how it’s measured you need to be on the W-2 during that period now let’s talk my preferred part money how much can you return per employee that was on a W-2 in those 6 quarters so the computation in 2020 to be specific Kevin is 50 of the worker’s wage to a maximum of 5 thousand dollars per staff member for the year of 2020 and in 2021 the numbers increased to 70 of the staff member’s wage to an optimum of seven thousand per quarter how did that happen um they simply altered 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 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 have to be lowered from the twenty six thousand dollars so if you took PPP loan one and PPP loan 2 you would decrease the 26 000 so what we’re seeing usually Kevin is if you took PPP cash somewhere 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 money you would still get a million dollar in the mail from the IRS so it’s substantial certainly now the big question is why does no one know about this because appearance when I initially found out about this when I first fulfilled Josh you understand I have actually got lots of investments in great deals of companies I’m a significant advocate for entrepreneurship in America and make numerous lots of investments in business owners of which many suffered through the pandemic when I first became aware of this I called BS I don’t believe it because I use 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 and that were well should have and we utilized them carefully to survive throughout the pandemic so when I heard about this I stated nah it can’t hold true however when I dug around I even called to my political leader pals Governor Senators they didn’t understand about it I imply 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 likewise not true so let’s ask Josh why does nobody understand about the staff member retention credit you understand what’s intriguing you’re discussing the banks Kevin since in the PPP loan process 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 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 chaos since remember in the original cares act you might not do both programs so if you had done PPP you could refrain from doing ERC in the original program and when they altered 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 ever made it clear to anyone about how to.
do this does your CFO understand how to do this not truly she or he’s never 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 company your accounting professional no your accounting professional’s never done this before unless you have an account that went into this business and bottom line my firm Kevin has actually been in business since 2009 and we’ve been working with the federal government and the state government to recuperate cash for Fortune 500 Fortune 1000 companies so a great deal of our big huge business clients have actually worked with bottom line to recover other federal government programs we have actually done sales tax and utilize tax unemployment tax work chance tax credits research and development tax credits unclaimed home property tax all of these other government programs.
The staff member retention tax credit is a broad based refundable tax credit developed to encourage.
companies to keep workers on their payroll. The credit is 50% of up to $10,000 in incomes paid by an.
employer whose service is totally or partly suspended because of COVID-19 or whose gross invoices.
decrease by more than 50%.
1. The credit is offered to all companies regardless of size consisting of tax exempt companies. There are.
only two exceptions: (1) state and city governments and their instrumentalities and (2) small.
services who take Small Business Loans.
2. To certify, the company needs to fulfill one of two alternative tests. The tests are calculated each.
calendar quarter– Either.
o the company’s service is fully or partly suspended by government order due to COVID-19.
throughout the calendar quarter or.
o the company’s gross invoices are listed below 50% of the equivalent quarter in 2019. Once the.
company’s gross receipts go above 80% of a similar quarter in 2019 they no longer qualify.
after the end of that quarter.
Calculation of the Credit.
The amount of the credit is 50% of the certifying wages paid up to $10,000 in overall.
It is effective for salaries paid after March 13th and prior to December 31, 2020.
The definition of certifying earnings varies by whether a company had, on average, basically than.
100 employees in 2019.
Companies that specialize in ERC filing assistance generally supply expertise and support to help businesses browse the complex process of claiming the credit. They can provide different services, consisting of:.
How is the employee retention credit calculated? How To Account For The Employee Retention Credit
Eligibility Assessment: These companies will evaluate your business’s eligibility for the ERC based upon elements such as your industry, revenue, and operations. If you fulfill the requirements for the credit and recognize the maximum credit quantity you can declare, they can assist determine.
Documentation and Computation: ERC filing services will help in collecting the required paperwork, such as payroll records and financial statements, to support your claim. They will also assist calculate the credit amount based upon qualified wages and other certifying expenditures.
Retroactive Claim Review: If you are qualified to declare the ERC for previous quarters, these companies can review your past payroll records and financials to identify potential opportunities for retroactive credits. They can help you change previous income tax return to declare these refunds.
Filing Help: Companies concentrating on ERC filings will prepare and submit the needed forms and documentation in your place. This consists of completing Form 941 or any other necessary tax return.
Compliance and Updates: ERC policies and assistance have evolved in time. These companies remain updated with the latest modifications and ensure that your filings abide by the most existing standards. If the IRS requests extra details or carries out an audit related to your ERC claim, they can also supply ongoing support.
It is necessary to research study and veterinarian any business providing ERC filing assistance to ensure their credibility and knowledge. Look for recognized firms with experience in tax and payroll services, or think about reaching out to trusted accounting firms or tax specialists who provide ERC filing assistance.
Keep in mind that while these companies can offer important support, it’s constantly a good idea to have a standard understanding of the ERC requirements and procedure yourself. This will assist you make notified 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 goal of the ERC is to motivate companies to retain and pay their staff members throughout the pandemic, even if their operations have actually been affected.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is offered to qualified companies, including for-profit businesses, tax-exempt organizations, and specific governmental entities. To qualify, employers need to fulfill one of two criteria:.
Business operations were fully or partially suspended due to a federal government order related to COVID-19.
The business experienced a substantial decrease in gross invoices. As mentioned previously, for 2021, a substantial decrease is defined as a 20% decrease in gross receipts compared to the same quarter in 2019. For 2022 and beyond, a substantial decrease is defined as a 20% decrease in gross invoices compared to the very same quarter in 2019, or a 20% decline in gross receipts compared to the immediately preceding quarter.
Credit Amount: 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 qualified wages paid to employees, consisting of particular health insurance costs. The maximum credit per employee is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: Initially, businesses that received an Income Defense Program (PPP) loan were not qualified for the ERC. Legislation passed in late 2020 and extended in 2021 enables organizations to claim the ERC even if they received a PPP loan. However, the same earnings can not be used to declare both the PPP loan forgiveness and the ERC.
Retroactive Provision: The ERC has been retroactively broadened and boosted, allowing eligible companies to declare the credit for qualified wages paid as far back as March 13, 2020. This retroactive arrangement supplies a chance for companies to change prior-year tax returns and receive refunds.
Claiming the Credit: Companies can claim the ERC by reporting it on their employment income tax return, generally Form 941. The excess can be reimbursed to the employer if the credit goes beyond the quantity of work taxes owed.
It is very important to keep in mind that the ERC arrangements and eligibility requirements have progressed over time. The best strategy is to speak with a tax expert or check out the official IRS site for the most detailed and updated details concerning the ERC, consisting of any current legislative modifications or updates.
To qualify for the ERC, a business should meet one of the following requirements:.
Business operations were totally or partly suspended due to a government order related to COVID-19.
Business experienced a considerable decrease in gross invoices. For 2021, a considerable decrease is defined as a 20% decline in gross invoices compared to the very same quarter in 2019. For 2022 and beyond, a substantial decline is specified as a 20% decline in gross invoices 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 services of all sizes, consisting of tax-exempt companies, but there are some exceptions. For instance, government entities and companies that received a PPP loan may have constraints on claiming the credit.
The procedure for claiming the ERC involves completing the needed forms and consisting of the credit on your work tax return (typically Kind 941). The exact time it requires to process the credit can vary based upon numerous elements, including the intricacy of your company and the workload of the internal revenue service. It’s recommended to speak with a tax expert for assistance particular to your scenario.
There are numerous business that can help with the procedure of claiming the ERC. These include accounting firms, tax advisory services, and payroll provider. Some widely known business that provide help with ERC claims consist of ADP, Paychex, Deloitte, and Ernst & Young. It’s advisable to research and call these companies straight to inquire about their fees and services.
Please note that the info supplied here is based upon general knowledge and may not reflect the most recent updates or modifications to the ERC. It is necessary to speak with a tax professional or go to the main IRS website for the most up-to-date and precise information regarding eligibility, claiming procedures, and offered assistance.
Less than 100. If the employer had 100 or fewer employees typically in 2019, then the credit is based.
on wages paid to all workers whether they actually worked or not. To put it simply, even if the.
employees worked full-time and earned money for full time work, the employer still gets the credit.
Greater than 100. The credit is if the company had more than 100 workers on average in 2019.
permitted only for earnings paid to employees who did not work throughout the calendar quarter.
In both cases, “earnings” includes not just cash payments but also a portion of the expense of employer.
supplied healthcare. How To Account For The Employee Retention Credit
Employers can be immediately reimbursed for the credit by reducing the amount of payroll taxes they.