If you missed out on the EIDL (Economic Injury Disaster Loan) and the PPP (Paycheck Protection Program), don't worry, there is another way to access funds to keep your business and your employees.
The Employee Retention Credit is a refundable tax credit that is equal to 50% of the “qualified wages” of each employee of an “eligible employer”. The credit is calculated on a calendar quarter basis and is applied against “applicable employment taxes” i.e. employer portion of Social Security tax (6.2% of wages). The credit is 50% up to $10,000 in wages paid for each employee, so the maximum credit is $5,000.
Who is qualified to apply? Employee retention credit is offered to businesses who were either suspended fully or partially due to COVID-19 or have experienced a significant decline in gross receipts. Hence, this refundable tax credit is important for those who haven't been able to receive EIDL or PPP loan. Please note that this credit does not apply to employee income tax withholding, the employee or employer portion of Medicare tax, or the employee portion of Social Security tax.
If you are confused or have questions about Employee Retention Credit, please contact us today. We also have a webinar on April 22nd that will go over payroll deferral, paid leave credit, retention credit, and many more! Sign up today!