Applying for the Employee Retention Tax Credit for San Diego, CA Businesses
In the wake of the coronavirus pandemic, San Diego, CA businesses are continuing to navigate the path to financial recovery. Amidst these challenges, it is crucial for business owners to explore available government resources. One government program that was designed specifically for this purpose is the Employee Retention Tax Credit, also known as ERTC or ERC.
If you have a business in San Diego, Los Angeles, San Francisco or another California city and have not yet applied for ERC, this article will serve as a guide on how to apply for and secure the Employee Retention Tax Credit, even if you received PPP funds.
What is the Employee Retention Tax Credit?
The Employee Retention Tax Credit, created under the CARES Act and subsequent legislation, is a program that helps businesses that struggled during the pandemic but managed to retain employees rather than lay them off.
The ERC is offered as a tax credit that 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.
What is the ERC Eligibility Criteria?
To qualify and receive the ERTC tax credit, San Diego businesses must meet specific eligibility criteria. The chart below outlines this criteria:
How Do Businesses Apply for ERC?
All businesses with 500 employees or less can apply for the Employee Retention Credit. And, businesses that received a Payroll Protection Plan (PPP) loan may also qualify for the tax credit. In order to apply for ERTC, San Diego businesses can follow these steps:
- Consult with a knowledgeable ERC tax professional or accountant. An experienced professional can provide guidance on the application process, help with accurately completing tax forms and submitting the forms to the IRS.
- Assess the businesses eligible credit amount by calculating the maximum credit. An ERC specialist should help with this calculation as the rules are different for 2020 and 2021.
- Accurately complete or modify the Form 941 (the Employer’s Quarterly Federal Tax Return), and submit it to the IRS.
- Keep thorough records of your ERC claim to substantiate your eligibility. This documentation may include payroll records, financial statements, and relevant evidence of the decline in gross receipts or government-issued orders.
Conclusion
The Employee Retention Credit is a federal program that can help San Diego businesses recover from the financial strains of the pandemic. Every eligible business in California should apply for ERC even if a PPP loan was issued.
Due to the fact that the laws are complex and the application process can be tricky, it is recommended that businesses utilize the services of an experienced ERC specialist. An ERC specialist can provide guidance and will know in just a matter of minutes if the business qualifies. Businesses that receive the tax credit can use the funds to help support their financial recovery from the pandemic.
If you have a business in San Diego and haven’t applied for the Employee Retention Credit as of yet, it’s not too late. If you have questions or would like to read reviews on some of the top ERC specialists and advisors, you can find that information on ERCTaxCreditReviews.com. Or, call us at 919-609-2714 and 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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