Commonly Misunderstood Facts About The Employee Retention Tax Credit

by

16 May 2023

Finance

Employee Retention Tax Credit

The ERC, employee retention tax credit, or employee retention credit, is a hot topic regarding business taxes.

However, it is often overlooked because it originated with the PPP or Paycheck Protection Program. Additionally, as more people are talking about it, it seems that many misunderstandings have caused business owners to believe that they don’t qualify for it when they do. 

Some of these misunderstandings stem from prior laws that have since changed, while others are based on the fact that some methods of getting ERC money are more popular than others. Additionally, there are other misunderstandings stemming from scams and confusion about the ERC.

Here Are Four Common Misunderstood Facts About The Employee Retention Tax Credit

Employee Retention Tax Credit

Here are some frequent misconceptions regarding the ERC and the truth around them. 

1. Two Eligibility Tests

The most notable misconception is that a business must have a decrease in revenue to be eligible for the ERTC. This stems from the eligibility facet that states that companies must have a gross receipts decline compared to their pre-pandemic numbers to be eligible. This is one of the tests used to determine ERC eligibility and is the more popular option. However, some areas of confusion within this test include:

  • An increase in revenue doesn’t disqualify you if you still have a decrease in gross receipts. 
  • This test is based on quarters, so failing to meet it in one quarter doesn’t disqualify you from others. 
  • There are multiple methods to apply a gross receipt test. 
  • PPP loan money is not included in the amount you claim for the ERC. 

While this is one test, there is also another. Although often overlooked, a full or partial suspension of operation due to government orders can also qualify your business without a decrease in gross receipts. Despite popular belief, you can still be eligible for the credit if you meet this requirement, even if you have an increase in revenue and do not have to shut down your business. 

2. Credit Amount

Employers who qualify can receive up to $7,000 per quarter per employee for the first three quarters of the year. Small businesses that opened during the COVID-19 pandemic can receive an extra $7,000 per employee. However, most companies will cap out at $21,000 per employee per year. If you have 100 employees meeting the salary requirements, you could receive $2,100,000. 

The ERC is refundable, which means it will be a refund credit for these employers. That means you can still write off other expenses on your taxes and get a return. That can make it more desirable than other tax credits, which must be taken immediately or forfeited. 

3. PPP Loan Disqualification

Another common misconception is that receiving funds through the PPP disqualifies employers from ERC eligibility. While that was initially true, recent legislation has changed this.

You can now receive PPP loans and an ERC, but you cannot use the same wage money towards both programs. That means that if you take out a loan, the money from it doesn’t count towards your ERC. Instead, the money that you spend on paychecks in addition to your PPP loan is what matters toward your ERC. 

4. Third-Party Assistance

This is more of a warning about issues that have caused concern among business owners. Due to the potential for significant credits, many scams have been established to help business owners file for ERC money.

While some small businesses are qualified to help individuals analyze the ERC laws and apply them for you, there are still scams out there. If you file with third-party help, ensure your chosen company is appropriately qualified. 

These misunderstandings have kept many small business owners from applying for the ERC when they were eligible—small business owners who have previously missed out need to consider whether they qualify for the ERC.

If you are eligible, you can receive thousands of dollars in tax credits. That can help your business recover from the recent pandemic and stay afloat amid future financially challenging times.

Read Also:

Arnab is a professional blogger, having an enormous interest in writing blogs and other jones of calligraphies. In terms of his professional commitments, He carries out sharing sentient blogs.

View all posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Related

Silver Dollars

4 Mistakes to Avoid When Shopping for Silver Dollars for Sale

Any form of financial activity is susceptible to traps and common mistakes. As an investor in precious metals, you’d want to avoid such misfortune, considering the volatility that accompanies these currencies. With that said, you should understand the precariousness associated with silver dollars and still avoid pitfalls in your investment strategy. Below are four mistakes you should avoid when shopping for silver dollars for sale. Unrealistic Expectations One of the biggest mistakes investors make, albeit their experience level, is impatience and greed. Similarly, many newbies in metal investment think it is a done deal, and prices can only go up in the short term. Wrong! The recipe for success in metal investment lies in patience and knowing that it is a long-term endeavor. You can only quantify your success over the years, not months. So, if you think this is a get-rich scheme, you have unrealistic expectations, which are a deathbed for your downfall. Before you venture into the business, evaluate your investment goals, why you are looking to sell silver dollars, and whether there is market stability. In most cases, you might be considering silver dollars for sale due to some global economic conditions that hardly change. This means that you should be in the business for the long haul. Don’t jump ship because you haven’t seen results in two weeks or months. Also, remember the flip side. Chasing the Price Some investors put all their faith in one investment strategy, and when it fails, they drop it for another. In most cases, investors feel that they have the best strategy, and it is guaranteed to work. However, when it doesn’t work, they blame it and take on another. In this instance, you should note that the problem lies with the investor, not the strategy. You need to approach such with the level-headedness they deserve. You should take a step back and allow the tactic some more time. Remember, investing in silver dollars for sale is a long-term holding. You can’t measure its success accurately in weeks or months. Minimal Research When you encounter something new, you can simply take advice from friends or websites and take the leap. There is significant information you must learn about silver dollars, and that means you should sift through misinformation too. While there are sound blogs that offer relevant information about the investment, make sure to assert the veracity of any information you collect. Learn how to identify fake silver dollars from the original ones by consulting with experienced investors. This information can be found on company blogs or websites hosted by wholesalers and dealers. Also, keep up to date with the latest information from the US Mint. Assess the Market Silver dollars prices will fluctuate as this is the innate nature of the market. As an investor, you should keep tabs, weigh the value and ensure your product gets a fair price. Always check the market from time to time to know the best time to buy and vice versa. Use these tips to avoid the common mistakes when buying silver dollars for sale. Now that you know, you can confidently invest. Read Also: Is Investment Bankers/Brokers/Service A Good Career Path In 2021? Top 5 Investment Decisions You Need To Make In Your Thirties How Many Jobs Are Available In Real Estate Investment Trusts? 2021 Updated

READ MOREDetails
Bitcoin

Does Bitcoin Harm the Environment?

One of the biggest concerns surrounding cryptocurrency, in general, is the impact that they have on the environment. In a world that is already struggling to catch up with the expectations that previous generations set, how much of an impact does Bitcoin make in the long term? Bitcoin Mining and Energy Bitcoin mining involves using a high-powered computer to solve a huge amount of cryptographic puzzles and problems, awarding bitcoins to the miner who operates that computer. This is a core part of how Bitcoin works and is also used to keep the blockchain behind it functioning. However, since computers need to become stronger and stronger to satisfy these requirements, they also need more power. Dedicated ‘rigs’ have been built that are focused on nothing but mining bitcoin, which consumes even more power at a faster rate. Over the last two years, Bitcoin mining caused an extreme spike in emissions, producing more than some countries would in the same length of time. While this is not an acceptable level, it also is not impossible to fix, and many people are already working on solutions. Renewable Energy Bitcoin mining has already begun to switch to renewable energy, with around 40% already having changed over. This does not sound like much, but it means that 40% of Bitcoin miners are using energy that is not going to pump CO2 into the atmosphere. This switch has helped a lot, but there is still more progress to be made. Until a massive proportion of Bitcoin mining is done with renewable energy, it will keep contributing to pollution and climate change. Elon Musk and Bitcoin While many people associated Elon Musk with Bitcoin, part of his reason for distancing Tesla from the currency was the Bitcoin environmental impact. Bitcoin had begun to create so much pollution that Musk actively suspended purchases using it, moving on to other cryptocurrencies instead. Considering that this came only a few weeks after he had announced buying almost $2 billion of Bitcoin, it was a surprising change, but one that made sense. However, Tesla has been open about the fact that they will return to using Bitcoin once it is more sustainable. The Future of Bitcoin Many people who are new to crypto often assume that Bitcoin means 'cryptocurrency,' even though there are plenty of other crypto options out there. This has led a lot of people to assume that every kind of crypto is just as risky, even though some are purpose-made to use sustainable options. This even includes Bitcoin itself, in some cases. The president of El Salvador tweeted about the state-owned geothermal power company using volcanos to create clean mining energy shortly after accepting it as a legal tender. This is meant to help keep Bitcoin circulating without those downsides. Bitcoin is not going away any time soon, but it will not return to the same level of popularity until it is cleaned up a bit. However, this also means that the price is lower now – people who are adopting sustainable mining options ahead of time will have plenty of Bitcoin before the next big spike. Read Also: Everything You Must Know About Bitcoin Circuit: Legal or Scam The Profit Revolution: The Best Bitcoin Trading And Investing Platform Investing In Bitcoins: 5 Things You Need To Know

READ MOREDetails
Alternative Business Financing

Alternative Business Financing – What Is It And How Do You Do It?

In this day and age, there are way more options for financing your business than just traditional bank loans. As a matter of fact, many business owners prefer alternative business financing for a number of reasons. One reason is that it can be way faster and easier. Business financing is a struggle for most new business owners. Most industries are often very competitive, and succeeding in the market is definitely not a piece of cake. It can take expensive marketing as well as expansions of physical shops and lots of other actions. In other words, starting a business is not for the faint of heart - and it is especially not cheap. Therefore, many business owners decide to look into alternative business financing. In this way, it becomes possible to grow the business without involving the bank. Small Loans, Line Of Credit And Business Credit Cards Alternative business financing is actually not just one thing but many. The alternative solutions are very popular, which explains why a lot of different options are available. You can find a number of these options, as well as valuable information about business financing, online. To give a few examples, alternative business financing can be small business loans, business lines of credit, invoice financing, merchant cash advances, business credit cards and equipment financing. As you can understand, the options are many. So how do you choose? Every option comes with different advantages and requirements. For example, a good credit history can be a requirement for some solutions, while it is not even a factor for others. Therefore, the first step is to get to know all your options and discover which ones suit you and your business the best. A Faster And Easier Solution Even though a bank can offer a certain sense of security, it can also be a long and troublesome way to go. Sometimes, your bank will require loads of documentation as well as a good explanation as to why you want to take a loan. Alternative business financing seems to attract a lot of business owners because the requirements are few, and the application process is way easier. As a matter of fact, for the most part, the fastest and easiest loans are the most popular. Alternative business financing often only requires a 1-page application and limited documentation. The whole application process takes place online, where you do not have to explain anything to anyone. Furthermore, it can be over and done within a few minutes, and you can have the money available within a couple of hours or maybe a day. All these traits make alternative lending options interesting to new business owners. However, you can also take a loan too quickly and too easily. It is always essential that you think it through and consider other options such as saving money or getting financial help from family and friends. There is no right solution for everyone. Read Also: Are Commercial Banks A Good Career Path In 2022? Quality Of E-Commerce Data Entry Services- Whether You Should Invest In Them? Starting Your Rare Coin Collections: A Beginners Guide to the 1794 Flowing Hair Half Dime

READ MOREDetails