The ERTC is a repayable payroll tax credit for wages paid by an employer whose company is wholly or partially suspended due to a COVID-19 order or who is experiencing a decrease of at least 10 percent in gross income compared to the same calendar quarter of the previous year. Small employers receive improved benefits under the ERC regime. Specifically, for as long as they are an eligible employer, they may include wages paid to all employees. Large employers can only include salaries paid to employees for not providing services.
Technically, yes, but only salaries that meet the requirements are paid while the mandates are in effect and have a more than nominal impact on the company. Instead, the employer must reduce wage deductions on their income tax return for the tax year in which they are an eligible employer for the purposes of the ERC. The employee retention credit is a fully refundable tax credit that eligible employers request against certain employment taxes. It's not a loan and it doesn't have to be repaid.
For most taxpayers, the refundable credit exceeds the payroll taxes paid during a credit-building period. While an employer cannot include wages financed with a PPP loan in the ERC calculation, PPP funds only apply to eight or ten weeks of wage expenses. ERC eligibility periods are longer. PPP loans can also finance non-wage expenses.
No, but, if possible, assign the maximum allowable non-wage costs available to the PPP that is being forgiven. It is likely that the fund's sister and sister holding companies may be treated as separate operations or businesses when considering the status of eligible employers, since the Fund Owner of the Portfolio Companies is not an active activity or enterprise (rather a passive investment vehicle). Cherry Bekaert LLP and Cherry Bekaert Advisory LLC practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations and professional standards. Cherry Bekaert LLP is an independent licensed CPA firm that provides certification services to its clients, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and business advisory services to its clients.
Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. The entities that belong to the Cherry Bekaert brand are independently owned and are not responsible for the services provided by any other entity that provides services under the Cherry Bekaert brand. . Since the ERTC is a refundable tax credit (and not a non-refundable or partially refundable tax credit), it means that any eligible company can access the full amount of the credit regardless of its income or other tax obligations.
Originally, employers had to choose between a Paycheck Protection Program (PPP) loan or apply for the Employee Retention Tax Credit (ERTC). While the ERTC is a great tool to help struggling companies reduce their tax burden, it is still a bit difficult to take advantage of it. The Consolidated Appropriations Act provided a welcome amendment to the CARES Act by allowing all eligible employers to apply for the ERTC, even if they have received a PPP loan. Eligible wages under the ERTC for an eligible employer who is not considered a small employer are wages and health insurance benefits paid to an employee who is not providing services due to the effects of the pandemic.
The ERTC is available to companies of all sizes: there is no employee limit, although it's easier for small businesses to take advantage of it. If you haven't yet applied for PPP loan forgiveness, consider applying non-payroll expenses to them so you can maximize the salaries you can use to apply for your ERTC. The ERTC is a payroll tax credit (not an income tax credit) and must ultimately be declared on Form 941.Unlike tax deductions that reduce a company's taxable income, the ERTC tax credit is subtracted from the amount of taxes owed by a qualifying company. Eligible employers can apply for the ERTC by calculating the amount of the ERTC for a pay period and reducing the required payroll deposit by that amount.
The ERTC was designed to help small businesses that lost revenue due to the pandemic, but only certain businesses are eligible. A financial professional can also help ensure that you don't apply for the same payroll for both PPP and ERTC loan forgiveness. Eligible wages under the ERTC for a small employer are all wages and health insurance benefits paid to an employee during the period in which the employer is considered an eligible employer. While budgets are always tight, it's a good idea to invest in the professional help of a qualified public accountant or other tax professional to help you determine exactly how the ERTC fits into your unique business and business plan.