Companies were impacted particularly hard by the epidemic due to government shutdowns and directives to lockdown. PPP loans were utilized by several businesses so that they could continue operating. Additionally, some companies participated in yet another program known as Employee Retention Credits (ERC Credits). The ERC program allows firms to claim credits on qualified earnings, including some of the costs of health insurance that are paid to employees.

Most companies decided to seek assistance from PPP loans to endure the pandemic. When they were first made available, companies could benefit from either ERCs or PPP loans, but not both. However, recent modifications to the program have made it possible to claim both of them, and you can make claims for a period in the past by filing amendments to your payroll taxes. Even though the Infrastructure Investment and Jobs Act of 2021, passed on November 15, 2021, retrospectively halted the program on September 30, 2021, qualified companies can still retroactively receive their tax credits.

ERC Credits Qualifying Wages

After you have established that your company is eligible, the next step is to identify the earnings considered qualifying wages. In most cases, wages and other remuneration subject to a tax withheld are considered qualified wages. When computing your employee retention credits, health insurance may also be eligible for consideration. ERC does not cover time off for holidays, vacations, qualifying illnesses, or family obligations.

Wages eligible for Paycheck Protection (PPP) must be subtracted from the total wages counted for the ERC credits, which is a crucial point to keep in mind. You are not eligible to make a wage claim for money earned through a PPP forgiven loan.

The number of employees working full time is the primary consideration in determining the minimum wage requirements. There are also some slightly varied requirements based on the year for which you are attempting to claim retroactive tax credits. The qualifications for the years 2020 and 2021 are shown below.

Steps On How To Claim ERC Credits

Gather Business information

Although the credit for retaining employees is accessible to all firms operating in the United States, not all of those organizations will necessarily qualify for it. Therefore, you should consult with your accountant or certified public accountant to determine whether your company is eligible to take advantage of this employee benefit. Getting together all of the information about your company is the first step. This pertains to information like the following:

●Business legal name

●Number of employees

●Legal address & information

To be eligible for the ERC credits, you must have been actively engaged in your profession or business throughout the years 2020 and 2021. These could be operations that a government has entirely or partially halted or a drop in your company's gross receipts throughout the calendar year compared to the previous year.

Get your payroll information ready.

After you have obtained all of your information, the next step is to collect any payroll information regarding your employees. This covers employees eligible for the employee retention credit, the employee's salaries, and the person's gross pay for each quarter of 2020 and 2021. You should be aware of this information if you already have an employee. However, if an employee has left the company, you must determine the exact date and time that they stopped working for your company.

You must obtain the payroll information for your employees from a payroll service; however, it is quite possible that the service will not have all of the information you require. To complete this application procedure section, you are not permitted to use a calculator or a spreadsheet.

The ERC has a number of issues, including the documentation of qualification techniques, collaboration with the PPP loans, criteria for the Concretolled group, and healthcare expenditures. It is strongly suggested that you work with an ERC specialist to avoid any problems with your application and ensure that you make the most of the credit available. If your payroll services do not give you all this information, then you don't need to do so.

Collect All Documents & Information Regarding PPP Loans

At this point, you need to collect any documentation we can find on PPP loans. This covers the amount of the PPP loan and the date that the PPP loan was issued. You can determine how much you are eligible to collect in ERCs by utilizing any documents about your PPP loans. If, on the other hand, you have never taken out a PPP loan before, then the information in this section is irrelevant to you, and you can move on to the next step.

Collect Information Regarding Your Full-Time Employees From 2019

You are going to need to compile a list of all of the full-time workers that were employed in 2019. You are going to need to have information from 2019 regarding both their full-time employment and their contact information. This comprises the employee's name and address of the place of work, in addition to the beginning and ending dates of their employment with your small business.

For an individual to qualify for this credit, the minimum number of hours they must work in a given week is thirty. For instance, if a person works 20 hours per week, but the minimum requirement is 30 hours, then that person is ineligible for the ERC since they do not meet the threshold. You should also be aware that as long as your company is subject to the Federal Insurance Contribution Act under the salary structure of your employees, you are eligible. Make sure that you have evidence of this. This is an important fact to keep in mind.

Gather Information Regarding Your Company's Sales Revenue From 2019-2020.

Last but not least, to qualify for the credit for retaining employees, you will need to compile any sales revenue from 2019-2020. The computation of the amount of the retention credit is based not only on whether or not you had a net profit for the year but also on the number of full-time employees you had. If you do not run a company that employs one hundred people or fewer, then you are exempt from this provision of the law.