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What is the Employee Retention Tax Credit (ERTC) and how can it benefit my business?
Updated: 3/31/2021
As a business owner, you probably have heard of the Paycheck Protection Program (PPP). You might even know that Congress passed legislation in December to fund the 2nd round if you had revenue in at least one quarter in 2020 that is at least 25% less than the same quarter in 2019. This benefit is highly valuable, and I recommend looking at your financials to see if you qualify.
What you might not be as familiar with is the Employee Retention Tax Credit (ERTC), a tax credit under the CARES Act that encourages businesses to keep employees on their payroll.
Before the latest legislation (Consolidated Appropriations Act, 2021), this credit did not apply to many businesses because you couldn’t take it if you did the PPP. Most companies that needed help chose the PPP. Now the following applies:
Most of the time, people rely on their tax accountant to help in this area. While they can help, due to the number of clients they tend to work with and how often you speak with them, you might miss out on some key opportunities.
You need current bookkeeping to know if you are eligible as soon as possible. This particular credit goes to June 2021. It is also a good idea to have a good financial forecast to understand if you might see a revenue dip in 2021 that will make you eligible. You can forecast the potential credit. Adjusting your forecast to consider this credit will affect your decision-making for hiring.
The ERTC opportunity is another reason I recommend all people to have current bookkeeping and an updated financial forecast.
You can always schedule a time to discuss your financial situation by booking a Zoom call with us. Click here to book a time.
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