IF YOU HAVE EMPLOYEES, THIS IS IMPORTANT FOR YOU TO READ.
In the spring, under one of the many stimulus bills, there was a new credit announced called the Employee Retention Credit. It was designed to help businesses continue to pay employees. The requirement for the credit was that a business had to experience a full or partial shutdown by a governmental order, or have a reduction in revenue of at least 50 % compared to the same quarter in 2020. In addition, that business could not have received a PPP Loan.
In December 2020, the new bill passed on the 27th that changed the rules for this credit retroactive for 2020. It eliminated the disqualification of a business with a PPP loan. The other requirements stayed in place.
For the first and second quarter of 2021, the requirements have changed. You can qualify if you experience a full or partial shutdown by a governmental order, OR you have a reduction in revenue of 20% or more. These are easier qualification criteria. NOTE: the “OR” in this case is very important.
The maximum credit for 2020 is $5,000 per employee for the year.
The Maximum credit for 2021 is $7,000 per employee per quarter. It is only in place for the first and second quarter of 2021 at this point.
This could add up to be a very large credit. It is also a refundable credit when you file your 941 quarterly payroll reports.
I believe it is wise to do this in two steps. Step One would be to determine if your business would qualify for the credit and estimate a rough amount. Step Two would be to do the work required to apply for this credit.
If you have additional questions, please schedule a zoom or phone appointment with me to discuss.