Breaking the Confusion of the ERTC Application

Why does completing the ERTC application have to be so difficult. Some feel the government wants to offer the program but doesn’t want to make it easy.

The truth is there are rules in place to ensure the proper businesses get the money they deserve and there are certain things that need to be determined in order to apply for the employee retention tax refund.

Are all Businesses Eligible for the ERTC Program?

Most small business employers are already aware of ERC. The CARES Act created Employee Retention Tax Credit as a benefit to help businesses keep their employees on payroll during the pandemic shutdowns and restrictions.

However, many employers are unaware they can quickly get this benefit and ERTC qualifications can get very cloudy.

The setback is that the IRS has not made the ERTC application process easy to complete. It can be very challenging for a business that doesn’t have the proper education and support.

Unfortunately, there is no simple ERC application portal.

Brief Overview of the Employee Retention Tax Credit

The ERTC application is a complicated process compared to PPP or Economic Injury Disaster Loan.

Your business accountant will prepare your financial reports and handle your taxes but will not prepare your payroll. The payroll company services, on the other hand, will not file for your tax credits.

In this case, you need to get assistance from a firm that specializes in ERTC maximize your tax refund.

The ERTC gives small to medium size eligible businesses and opportunity to receive up to 50% of the qualifying wages paid by the employer.

If you have already received a PPP loan, you are still eligible for ERTC. The maximum ERTC allowed to a company in the form of payroll tax credit to $26,000 per employee.

This is a crucial time to get over your doubts and stop second-guessing this government tax advantage and allow it to help you with money back for your business.

How Do I Apply for ERTC?

The IRS ERC Application process, employers must fill out Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.

The employers must fill out their quarterly federal tax returns. If you need more guidance about the qualification of your business and how to apply for the ERTC, we recommend talking to our Federal Tax Credit experts.

You can claim 70% credit under the ERC, which started in 2021. This increase over the previous year shows that an employer’s qualifying pay can be up to $10,000 per quarter.

Small business employers can also gain additional benefits from the ERC program. All companies are eligible for ERC, but that doesn’t mean they can qualify.

We advise consulting with an Employee Retention Credit consultant to ensure you can qualify for the program.

Documents Required to Apply for the ERC Tax Credits:

1. Begin by collecting your company’s data like legal address, employees’ numbers, and your legal business name. You must take into consideration everything related to your business and which will come in handy during the application process.
2. Now collect your employee’s payroll data, as the employees who qualify for the ERC will be credited. Then collect all your PPP loan documents and information like when the loan was granted, the amount of the loan, and how many ERCs you can get based on your PPP loans. However, you can skip this step if you have never received a PPP loan.
3. Compile your full-time employee information who worked for you in 2019. This includes their contact information, job details, name and address of the workplace, and the start and end dates of their labor. The minimum threshold for full-time workers is 30 hours per week.
4. Now gather your sales revenue data from 2019 to 2020 for the ERC. The sales money data include net income and loss and the number of full-time employees.

How Long Does it Take for Refund After Amended Filing

According to IRS, you can expect reimbursement if you have already filled out a form after 6 to 10 months from the filing date.  

The process can go more smoothly if the required documents are filled out correctly. This is where it could be helpful to have the aid of an ERTC consultant to be sure things were handled properly.

Understanding the ERTC Application Process

The ERC can provide thousands of dollars as a small business employer. You need to know a few things before applying for ERTC.

• It is a refundable payroll tax credit. It can be as high as $5000 in 2020 or $21,000 in 2021 per employee.
• Those employers that experience partial shutdown of their business operations due to government orders that limit their travel, commerce, and group meetings, qualify for the ERC.
• Those employers who experienced a considerable decline in quarterly gross receipts due to the pandemic are also eligible for this program.
• A small employer is defined as one having 100 or less than 100 full-time employees for the 2020 ERC.
• According to the 2021 ERC, a small employer is defined as having 500 or less than 500 full-time employees.
• Employers can claim the ERC for the paid qualifying wages in 2020 and the first, second, and third calendar quarters of 2021.

An employer can receive the ERC on the federal payroll tax fillings. This involves filling the form 941 to collect the credits. However, if an employer discovers afterward that they qualify for the credit, they can update their Form 841.

How Much Can a Business Get Back From ERTC?

Employee retention credit equals 50% of the qualified wages paid to the employees. The maximum qualified wage amount per employee is $10,000, which means that $5000 is the maximum credit an employee can receive per employee. This is adjusted for 2021, where a business can get as much as $26,000 per W-2 employee.

In addition to experiencing a considerable reduction in gross receipts due to governmental orders during the pandemic, an employer must also have retained its employees and paid them at least $600 worth of qualifying wages. 

The qualifying wages include hourly pay, salary, compensation, and commissions.

To qualify, the business must first file for the ERC with the IRS and provide basic company and employee documentation showing the pandemic severed the business operations.

The IRS then reviews the application to determine whether the business is eligible. The ERC will apply to your future payroll taxes if the IRS approves your business.

ERC is an unexpected lifeline for businesses struggling to keep their employees on the payroll, and the credit provides much-needed relief through financial aid.

We Are Here to Help With ERTC Assistance

We are here to assist with ERTC filing for small business owners to qualify and avail of the ERC benefits for their business operations. You can also walk through the intake form to check whether your business qualifies for an employee retention tax refund.