{"id":203845,"date":"2021-09-07T09:59:46","date_gmt":"2021-09-07T16:59:46","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=203845"},"modified":"2023-11-09T13:12:07","modified_gmt":"2023-11-09T21:12:07","slug":"what-is-the-employee-retention-credit","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/what-is-the-employee-retention-credit\/","title":{"rendered":"What Is Employee Retention Credit and How Can It Help You"},"content":{"rendered":"

Update:<\/strong> As of September 14, 2023, the IRS has announced a moratorium on the processing of all new Employee Retention Credit claims until at least 2024. For more information, visit IRS.gov<\/a><\/em><\/p>\n

The Employee Retention Credit (ERC), a provision of the Coronavirus Aid, Relief and Economic Security (CARES) Act, was designed in an effort to keep employees on payroll throughout the COVID-19 pandemic. Eligible employers who retained their employees might be eligible for this tax credit in the 2021 filing season, but this federal offering<\/a> is complex, leaving many small business owners asking their accountants: What is<\/em> the employee retention credit? And does my small business qualify?<\/p>\n

To better understand the ins and outs of the ERC, we spoke to an experienced CPA and small business tax specialist. Ernie Villany, CPA, is the founder and president of Boulder Vall<\/a>ey CPA<\/a>, a Colorado-based CPA\/advisory firm representing clientele in 30 states.<\/p>\n

Villany has over 20 years of experience in public accounting, helping small business owners around the world plan and manage their businesses’ financial growth while mitigating tax liabilities.<\/p>\n

Here’s his expert breakdown of this new tax credit.<\/p>\n

Determining Eligibility for the Employee Retention Credit<\/h2>\n

“Under the American Rescue Plan Act of 2021, the ERC allows employers to offset their payroll tax liabilities against 70% of qualified wages, up to a $10,000 limit per quarter,” says Villany.<\/p>\n

Determining whether your business qualifies for this significant tax credit is the first step as eligibility hinges on information about your business’s size, revenue loss, and more. Businesses that fully or partially shut down due to COVID-19 and\/or experienced a decline in gross receipts of 20% in any quarter of 2021 were specifically called out<\/a> as eligible, Villany says.<\/p>\n

The ERC has evolved quickly with changing regulations, eligibility criteria, and more. Consult an experienced accountant, CPA, or financial\/tax adviser to make sure you’re assessing your eligibility for the credit based on the latest criteria.<\/p>\n

Villany highlights two recent, subtle (but important) changes that some business owners might not be aware of:<\/p>\n