Employee Retention Credit or ERC is a tax credit program for firms who have retained their employees on payroll during government-imposed COVID restrictions. However, there are a few caveats and other requirements that firms must follow in order to qualify for this tax credit. There are also some important questions employers should ask themselves before participating in this program. You can find an erc specialist for California businesses if you have more queries about the ERC program.
Below we’ve compiled the most commonly asked questions about employee retention credits and our answers.
- What businesses are eligible for ERC benefits?
All types of businesses can be eligible for ERC if they meet certain eligibility criteria. Here are certain eligibility criteria that will qualify a business for ERC benefits:
- A full or partial suspension of business due to government-imposed COVID restrictions
- A significant decline in gross receipts
- What is a “significant decline” in gross receipts?
To be qualified for ERC benefits 2020, the quarterly revenue of your business should have declined more than 50% when compared with the revenue of the same quarter in 2019.
And for ERC 2021, the quarterly revenue of your business should have declined more than 20% from that of the same quarter in 2019.
- Can I apply for ERC if I already received PPP benefits?
Yes, you can apply for ERC if you have already received PPP benefits. ERC and PPP are entirely different programs, even though both have been put forward under the CARES Act. PPP is a loan given to businesses that have been affected by COVID restrictions. So, if you’ve already received PPP credits, ERC is still a good option for you to come out of the COVID impact and grow your business.
- Is ERC tax credit taxable?
Yes. ERC is a tax credit, and it’s taxable. ERC will be applied to business owners’ gross income. So, make sure you are ready to pay the taxes with this credit in case your gross earnings exceed the business tax threshold.
You can consult an ERC specialist to know more about the ERC program. ERC benefits will get you out of the current financial strain as well as prepares you for future growth. In fact, the ERC program is a great way to boost your business and stay competitive while staying in line with COVID restrictions.
