How to Apply for Employee Retention Tax Credit (ERTC) for California Businesses
In the aftermath of the unprecedented challenges brought about by the COVID-19 pandemic, businesses in California are striving to regain their financial stability. In this recovery process, it is crucial for business owners to understand and utilize all available government resources. Many businesses have received Payroll Protection Program (PPP) loans, however, another resource is available to businesses even if they received the PPP. It is called the Employee Retention Tax Credit (ERTC).
Similar to PPP, ERTC or ERC is a program designed to support businesses that faced hardships during the pandemic, yet decided to retain their employees rather than lay them off. Many businesses qualify for the ERC program but may be unaware that they do so. This article will help businesses in San Diego, Los Angeles, San Francisco and all others understand the Employee Retention Credit and learn how to apply for the Employee Retention Credit program.
Understanding the Employee Retention Tax Credit (ERTC)
The Employee Retention Credit was initially created under the government’s CARES Act. The program was intended to provide eligible employers with a tax credit based on wages paid to employees who were not able to work because of a temporary closure of a business or a decline in sales during specific quarters. Like the PPP, ERC aims to alleviate financial strains that were caused by the pandemic for businesses that meet the ERC eligibility criteria.
What is the Eligibility Criteria for the ERTC?
For California businesses to receive the ERC tax credit funds, they must meet specific eligibility criteria. This chart is a guideline that will help businesses determine if they qualify for ERC.
How to Apply for the ERTC
California businesses with under 500 employees should consider applying for ERC. Here are a list of essential steps to apply for and benefit from the Employee Retention Tax Credit:
- Seek guidance from a knowledgeable ERTC specialist or tax professional who specializes in the Employee Retention Tax Credit. These professionals can provide valuable insights, help navigate the application process, and ensure accurate completion of necessary forms.
- If your business qualifies, have your ERC specialist help determine the maximum credit amount based on qualified wages. The formula for calculating the ERC credit for 2020 and 2021 is different, making professional assistance crucial.
- Complete or modify the business’ quarterly federal tax return (Form 941) with the assistance of your tax professional. Provide details about qualified wages and the number of eligible employees.
- Keep thorough documentation of business records in the event of a future audit by the IRS. This documentation may include payroll records, financial statements, and any relevant evidence of the decline in gross sales.
Conclusion
The Employee Retention Tax Credit is a valuable resource for California businesses working hard to recover from the financial impacts of the COVID pandemic. By understanding the eligibility criteria and carefully following the application process, businesses can leverage this tax credit to support their operations. It is best to consult with an ERC specialist or knowledgeable tax professional for accurate guidance and compliance.
If you have a business in California and have yet to apply for the Employee Retention Credit you should not hesitate. ERCTaxCreditReviews.com is an excellent resource that may help answer additional questions you have as well as help you choose the best ERC advisor for your business. If you’d like to speak with someone directly, call us at 919-609-2714. We’d be happy to hear from you.
In the aftermath of the unprecedented challenges brought about by the COVID-19 pandemic, businesses in California are striving to regain their financial stability. In this recovery process, it is crucial for business owners to understand and utilize all available government resources. Many businesses have received Payroll Protection Program (PPP) loans, however, another resource is available to businesses even if they received the PPP. It is called the Employee Retention Tax Credit (ERTC).
Similar to PPP, ERTC or ERC is a program designed to support businesses that faced hardships during the pandemic, yet decided to retain their employees rather than lay them off. Many businesses qualify for the ERC program but may be unaware that they do so. This article will help businesses in San Diego, Los Angeles, San Francisco and all others understand the Employee Retention Credit and learn how to apply for the Employee Retention Credit program.
Understanding the Employee Retention Tax Credit (ERTC)
The Employee Retention Credit was initially created under the government’s CARES Act. The program was intended to provide eligible employers with a tax credit based on wages paid to employees who were not able to work because of a temporary closure of a business or a decline in sales during specific quarters. Like the PPP, ERC aims to alleviate financial strains that were caused by the pandemic for businesses that meet the ERC eligibility criteria.
What is the Eligibility Criteria for the ERTC?
For California businesses to receive the ERC tax credit funds, they must meet specific eligibility criteria. This chart is a guideline that will help businesses determine if they qualify for ERC.
How to Apply for the ERTC
California businesses with under 500 employees should consider applying for ERC. Here are a list of essential steps to apply for and benefit from the Employee Retention Tax Credit:
- Seek guidance from a knowledgeable ERTC specialist or tax professional who specializes in the Employee Retention Tax Credit. These professionals can provide valuable insights, help navigate the application process, and ensure accurate completion of necessary forms.
- If your business qualifies, have your ERC specialist help determine the maximum credit amount based on qualified wages. The formula for calculating the ERC credit for 2020 and 2021 is different, making professional assistance crucial.
- Complete or modify the business’ quarterly federal tax return (Form 941) with the assistance of your tax professional. Provide details about qualified wages and the number of eligible employees.
- Keep thorough documentation of business records in the event of a future audit by the IRS. This documentation may include payroll records, financial statements, and any relevant evidence of the decline in gross sales.
Conclusion
The Employee Retention Tax Credit is a valuable resource for California businesses working hard to recover from the financial impacts of the COVID pandemic. By understanding the eligibility criteria and carefully following the application process, businesses can leverage this tax credit to support their operations. It is best to consult with an ERC specialist or knowledgeable tax professional for accurate guidance and compliance.
If you have a business in California and have yet to apply for the Employee Retention Credit you should not hesitate. ERCTaxCreditReviews.com is an excellent resource that may help answer additional questions you have as well as help you choose the best ERC advisor for your business. If you’d like to speak with someone directly, call us at 919-609-2714. We’d be happy to hear from you.
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