For many entrepreneurs, surviving the COVID-19 pandemic will be the biggest test they will face in their companies’ lifetimes. But they don’t have to endure it without help. The federal government has put resources in place to assist businesses struggling to keep their doors open.
The Employee Retention Tax Credit (ERTC) is an incentive that was created within the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It was designed to encourage employers to keep their people on the payroll as they deal with the fallout from COVID-19. The refundable payroll tax credit is calculated based on a percentage of eligible wages. But the program can only help a business if employers know to apply for it. Adding to the confusion, initially employers couldn’t qualify for both a Paycheck Protection Program (PPP) loan plus claim the ERTC. Now they can.
Blackburn Capital Advisors recently identified an opportunity for a client to benefit from this program. The relief couldn’t come at a more crucial time. The business owner is burdened with rising costs – both hard costs from vendor surcharges, as well as soft costs incurred by the additional time needed to manage projects in this complicated era. Factors such as global supply chain disruptions, product shortages, and a lack of labor are resulting in higher costs for interior designers. The situation is compounded because these costs are difficult to pass through to the ultimate client. Accessing programs such as the Employee Retention Tax Credit is helping our clients navigate successfully through these uncertain times.
Our financial analysis revealed that our client qualified for the tax credit for the first and second quarters of 2021. Owner wages don’t qualify for ERTC, but the business also has two other full-time employees. That resulted in a total tax credit of $28,000. We have filed Form 941x for the respective quarters and expect our client to receive the benefit.
The ERTC program underwent changes in 2021 that made it easier than ever for businesses to qualify for the program and retain their employees during the financial turmoil of the pandemic. Companies that have faced disruptions leading to a significant decline in gross receipts shouldn’t wait to investigate their eligibility. They could be leaving much-needed cash on the table.
We have developed a gross receipt calculator that will help you with the initial qualification steps. Visits our Contact Us page to learn more about ERTC.