Our company recently conducted a survey of 500 business decision-makers and found that nearly half (44 percent) of businesses haven’t participated in any incentive programs beyond PPP because they don’t know if their company qualifies. In addition, almost all businesses (88 percent) say they would be more willing to use a solution to manage incentive programs if it was backed by accountants.
For many industries, the Employee Retention Tax Credit program is the single biggest opportunity for employers to get the federal support they need in 2021, yet it has not been widely recognized to date as such and in many cases, it is more significant than PPP was in 2020.
So what is the Employee Retention Tax Credit (ERTC) and how do companies figure out if they qualify? Here are some tips and insights to help determine if your company is eligible and unlock the full value of ERTC to rebound and grow as the pandemic continues:
What is the Employee Retention Tax Credit?
The Employee Retention Tax Credit is an incentive program enacted as part of Congress’s response to the COVID-19 crisis. It is intended to provide economic relief to employers whose operations were impacted by government orders associated with the pandemic, yet continued to pay employees. The ERTC, under the CARES Act, is a fully refundable payroll tax credit that allows eligible businesses to deduct up to 70 percent of up to $10,000 in qualified wages paid per employee per quarter for tax year 2021.
Can a Business Claim Both ERTC and PPP?
The Consolidated Appropriations Act, 2021 extended and enhanced both the Paycheck Protection Program (PPP) and the ERTC program. Companies that received PPP loans may now also claim the ERTC. Congress also removed a restriction on dual support, so now employers can claim the PPP loan and an Employee Retention Tax Credit – including a look-back opportunity for businesses which meet the eligibility requirements of the ERTC in 2020.
How Do I Know If My Business is Eligible?
Companies qualify for the ERTC if they (1) had a substantial decline in quarterly revenue, or (2) were fully or partially shut down due to governmental orders, or (3) began a new trade or business and previously had less than $1 million in average annual revenue.
How Much Credit Can I Expect to Receive?
For 2020, the ERTC is worth up to $5,000 per employee per year. As of 2021, it’s worth up to $7,000 per employee per quarter.
Which Industries Have Been Impacted?
Any industry which was negatively impacted by COVID-19 crisis. Especially significant are health-care, hospitality, restaurants and food-service, retailers, staffing, assisted living and even many not-for-profit organizations.
When will the Employee Retention Tax Credit End?
The ERTC was set to end on December 31st, 2021, however, there was a provision in the infrastructure bill which would end the program on September 30th if passed by Congress. However, it is open-ended – meaning even after this date, businesses have up to three years from the date of filing their employment tax return to make their claim.
How Can Businesses Like Clarus Help?
Clarus ensures companies are able to identify eligibility and document it appropriately while also streamlining the process so business owners can focus on growth and not paperwork. Our focus is to help every small and midsize business take advantage of ERTC and it starts by driving awareness so that more companies can easily tap into it.
Clarus monitors more than 60 state and federal tax incentive programs and has helped companies secure more than $175MM in incentive dollars. To learn more and determine if your business is eligible for ERTC, visit https://info.clarustaxcredits.com/acton/media/43811/ertc.
Brent Johnson, co-founder of Clarus, the leader in technology that enables businesses to unlock the value of tax incentive programs
For more about Clarus Solutions, check out a few fast facts below:
Who we are
Clarus Solutions, headquartered in Columbus, Ohio, is a leading cloud-based platform helping businesses unlock the full value of federal and state incentive programs.
What we do
Passionately led by tax experts with decades of experience, our technology has helped clients claim on average $1,100 in Employee Retention Tax Credits (ERTC) per full time employee.
The value of ERTC
The tax relief is worth up to $5K per employee in 2020 and up to $7K per employee per quarter 2021 (even if you have already received PPP loans!).
The Clarus Difference
Backed by technology and unparalleled client service, we collaborate with companies to help them understand their qualifications and deliver actionable insights for leveraging programs that impact hiring decisions and their bottom line.
Founded in 2014, Clarus customers benefit from experts with collectively 150+ years of tax experience who are dedicated to helping clients improve the economics of their business.
Our team of highly skilled tax experts specialize in customizable solutions that transform cash flow for businesses through employment tax credit opportunities, delivering unparalleled client service and unmatched results.
Clarus believes in the power of employment tax credits for improving business finance as well as helping our community members find and keep jobs.