How to Apply for the Employee Retention Tax Credit for Phoenix, AZ Businesses
As Phoenix, Arizona businesses navigate the economic aftermath of the COVID-19 pandemic, it is crucial for business owners to explore available resources and financial relief programs. Among these programs, the Employee Retention Tax Credit, also known as ERTC or simply ERC, offers eligible businesses an opportunity to receive a tax credit for periods in which their business was negatively affected by the pandemic. Here are some steps for Phoenix businesses to apply for and secure the Employee Retention Credit.
Understanding the Employee Retention Credit
Similar to the Payroll Protection Program or PPP, the ERC is a federal program designed to help businesses that suffered but managed to maintain their workforce during times of economic hardship. This credit allows eligible employers to claim a portion of wages paid to employees who were not working due to a significant decline in business activity or a full or partial suspension of operations.
While PPP was a federal loan that was required to be used strictly for payroll needs in order for it to be forgiven, the funds disbursed for the ERC tax credit are not earmarked. This means that a business can use the funds for whatever business purpose it sees fit. What’s also great about ERTC is that businesses can apply for ERC even if they received PPP. All businesses in Phoenix that think they may qualify for the Employee Retention Credit are encouraged to apply.
ERC Eligibility Criteria
The amended criteria from the IRS states that for Arizona businesses to qualify for ERC they must have:
- A full or partial suspension of operations due to government order due to COVID-19 during any quarter, or
- A significant decline in gross receipts (beginning when gross receipts are less than 50% of gross receipts for the same calendar quarter in 2019 and ending in the first calendar quarter after the calendar quarter in which gross receipts are greater than 80 percent of gross receipts for the same calendar quarter in 2019).
Read more about the ERC eligibility criteria for businesses.
ERC Application Process
To apply for the Employee Retention Tax Credit, Phoenix businesses should follow these essential steps:
- Find an ERC specialist or accountant with experience working on the ERC tax credit. Due to the fact that the tax laws as well as the application process is complex, an ERC specialist will help to ensure filing accuracy and prevent hassle in the future.
- Determine the maximum credit based on qualified wages paid to each eligible employee.
- Complete Form 941, the Employer’s Quarterly Federal Tax Return. Provide accurate information on qualified wages and the number of eligible employees and then file with the IRS.
- Retain comprehensive documentation to support your eligibility and the amount of credit claimed. This documentation may include payroll records, financial statements, and relevant documents demonstrating the decline in gross receipts or government-issued orders.
Conclusion
The Employee Retention Credit provides Phoenix businesses with an opportunity to mitigate some of the financial burdens that resulted from the pandemic. By understanding the ERTC eligibility criteria and following the application process diligently, businesses can leverage this program and receive a tax credit. The tax credit funds can be used to support their operations and contribute to their business’s post-pandemic recovery. Unlike PPP, funds can be used for anything. And even if a business received PPP, they may be eligible for ERC.
As stated above, all businesses should seek the advice of an ERC specialist or accounting firm. An experienced professional will help to ensure that the 941 is correctly completed and filed with the IRS. Remember to maintain thorough records and seek guidance from tax professionals or accountants to ensure compliance. With the ERTC, Phoenix businesses can recover from the hardships of the past and pave the way for a prosperous future.
If you have a business in Phoenix and have questions about applying for the Employee Retention Credit, our ERC FAQs may be able to help. Or, reach out to us directly at 919-609-2714. We’d be happy to help!
As Phoenix, Arizona businesses navigate the economic aftermath of the COVID-19 pandemic, it is crucial for business owners to explore available resources and financial relief programs. Among these programs, the Employee Retention Tax Credit, also known as ERTC or simply ERC, offers eligible businesses an opportunity to receive a tax credit for periods in which their business was negatively affected by the pandemic. Here are some steps for Phoenix businesses to apply for and secure the Employee Retention Credit.
Understanding the Employee Retention Credit
Similar to the Payroll Protection Program or PPP, the ERC is a federal program designed to help businesses that suffered but managed to maintain their workforce during times of economic hardship. This credit allows eligible employers to claim a portion of wages paid to employees who were not working due to a significant decline in business activity or a full or partial suspension of operations.
While PPP was a federal loan that was required to be used strictly for payroll needs in order for it to be forgiven, the funds disbursed for the ERC tax credit are not earmarked. This means that a business can use the funds for whatever business purpose it sees fit. What’s also great about ERTC is that businesses can apply for ERC even if they received PPP. All businesses in Phoenix that think they may qualify for the Employee Retention Credit are encouraged to apply.
ERC Eligibility Criteria
The amended criteria from the IRS states that for Arizona businesses to qualify for ERC they must have:
- A full or partial suspension of operations due to government order due to COVID-19 during any quarter, or
- A significant decline in gross receipts (beginning when gross receipts are less than 50% of gross receipts for the same calendar quarter in 2019 and ending in the first calendar quarter after the calendar quarter in which gross receipts are greater than 80 percent of gross receipts for the same calendar quarter in 2019).
Read more about the ERC eligibility criteria for businesses.
ERC Application Process
To apply for the Employee Retention Tax Credit, Phoenix businesses should follow these essential steps:
- Find an ERC specialist or accountant with experience working on the ERC tax credit. Due to the fact that the tax laws as well as the application process is complex, an ERC specialist will help to ensure filing accuracy and prevent hassle in the future.
- Determine the maximum credit based on qualified wages paid to each eligible employee.
- Complete Form 941, the Employer’s Quarterly Federal Tax Return. Provide accurate information on qualified wages and the number of eligible employees and then file with the IRS.
- Retain comprehensive documentation to support your eligibility and the amount of credit claimed. This documentation may include payroll records, financial statements, and relevant documents demonstrating the decline in gross receipts or government-issued orders.
Conclusion
The Employee Retention Credit provides Phoenix businesses with an opportunity to mitigate some of the financial burdens that resulted from the pandemic. By understanding the ERTC eligibility criteria and following the application process diligently, businesses can leverage this program and receive a tax credit. The tax credit funds can be used to support their operations and contribute to their business’s post-pandemic recovery. Unlike PPP, funds can be used for anything. And even if a business received PPP, they may be eligible for ERC.
As stated above, all businesses should seek the advice of an ERC specialist or accounting firm. An experienced professional will help to ensure that the 941 is correctly completed and filed with the IRS. Remember to maintain thorough records and seek guidance from tax professionals or accountants to ensure compliance. With the ERTC, Phoenix businesses can recover from the hardships of the past and pave the way for a prosperous future.
If you have a business in Phoenix and have questions about applying for the Employee Retention Credit, our ERC FAQs may be able to help. Or, reach out to us directly at 919-609-2714. We’d be happy to help!
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