Is Your Company Eligible for the Employee Retention Credit?

The Employee Retention Credit was covered as part of our Stay Strong Webinar on December 30, and now we have additional information to share.

To determine whether or not your company is eligible for Employee Retention Credits—which can be up to $14,000 per employee—here is a breakdown of the requirements for 2020 and 2021:

2020

  1. Were your gross receipts (aka sales) down 50% or more or were your operations fully or temporarily suspended during any quarter during 2020?  If so you most likely qualify for this credit.
  2. Credit is equal to 50% of employee wages up to $5,000 per employee
  3. PPP wages cannot be included in the credit calculation
  4. 100 or fewer employees
  5. If you feel you qualify you should hold off on filing your 2020 Q4 payroll Form 941 that is due on January 31, 2021

2021

  1. Were your gross receipts (aka sales) down 20% or more or were your operations fully or temporarily suspended during Q1 or Q2 of 2021? If so, you most likely qualify for this credit.
  2. Credit is equal to 70% of employee wages up to $7,000 per employee per quarter = $14,000 total per employee
  3. PPP wages cannot be included in the credit calculation
  4. 500 or fewer employees

This credit could be significant for employers. For example, organizations with 20 employees each earning $40,000 or more per year could earn $14,000 per employee or a total credit of $280,000.

Our RDG+Partners Payroll and Benefits team will host another Stay Strong Webinar next week to cover more details about this credit, related strategies and how we can assist you. Stay tuned for details.

Other RESOURCES

Frequently Asked Questions: Awaiting SBA Guidance

For payroll paid during the covered period is it based on the date paid or is it based on when the payroll was incurred? Is there a limit on how much an employee can make compared to the most recent quarter if it is not in excess of $100,000 on an annual basis? Is rent, utilities, interest, etc. in arrears eligible for forgiveness if paid during the covered period? What about amounts paid in advance? For employees laid off prior to 4/27 and hired back by 6/30 is there a time period they must remain employed in order to avoid a reduction in loan forgiveness? How do you define FTE? Is it 30, 35 or 40 hours? We know non-mortgage interest is a covered cost, but is it also eligible for forgiveness? How do you measure the 25% reduction amount for payroll? For example, from 1/1/20 to 3/31/20, do you look at number of hours, rate per hour, or just total compensation during that period? If you bonused people during Q1 of 2020 that is not a part of their normal compensation, is that included when looking at the 25% reduction for payroll? What is “transportation” with regards to being a utility? Does this include mileage, gas for vehicles, etc.? Does “rent” include all leases (building, vehicle, equipment, copiers)? If not, what does it include? If a business hires new employees after 2/15/20, can they be included in the FTE count for the 8-week period? Are there any restrictions on compensation (increases) for related parties (mother, father, brother, sister, child, etc.)?

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