By Cara Olson, Special FBA Contributor
The COVID-19 pandemic has had a devastating effect on businesses across the country, with many having to close their doors for good. While this can be a heartbreaking situation for business owners, there is some hope in the form of the Employee Retention Credit (ERC).
The ERC was created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act and provides tax credits to employers who retained their employees and maintained payroll during those difficult times.
While most people assume that only businesses still operating are eligible for the credit, closed businesses can also qualify under certain circumstances. If a business closed due to COVID-19 related reasons or had gross receipts decline by more than 50% compared to 2019, they may be eligible for up to $5,000 per employee in refundable payroll tax credits for 2020 and $7,000 per quarter in 2021.
To take advantage of this opportunity employers must meet some criteria including:
- Meet the gross receipts test or the business was affected by Covid-19 regs
- Paying qualified wages anytime between March 13th, 2020 to September 30th, 2021
- Having fewer than 500 full-time employees
Many accountants are telling business owners that they do not qualify even when they do. The reason they are doing that is because they are only looking at the gross receipt qualifier. There is another way to qualify and the majority of accountants do not know about it.
Some also think that if you have already received Paycheck Protection Program (PPP) funds If then you cannot claim both benefits - you must choose one or the other. That is no longer true. If you have not checked with an expert and have heard you do not qualify, then do yourself a favor and get a second opinion from a company that knows the Employee Retention Credit like the back of its hand.
Another perk of the ERC is you can use the refund for what you want. Some examples include paying wages to employees, purchasing supplies or equipment necessary to maintain your gym operations, covering rent and other overhead expenses, and making capital improvements to the business premises or property. There are no restrictions and the ERC is not a loan, so you do not need to get it forgiven or pay it back.
Those that are still open also qualify. As many gym owners struggle to keep their businesses afloat, wouldn’t some extra money help your bottom line?
If you had to close, it had to be really hard to close your gym or studio after all of the work and energy you put in. It might have even been a dream of yours you had to let go which is probably the hardest of all of it. Now you can take away some of that pain and get the ERC refund that you deserve. After all, isn’t it the govt that caused your shutdown in the first place?
Cara Olson is a business consultant with over 25 years of experience. She has owned businesses of her own in different industries including financial, medical, and health. Her expertise is in operation and sales. She has teamed up with the best ERC companies to help educate small and medium sized businesses about the ERC refund credit.