At Beehive Insurance, we are always searching for ways to help educate and consult with our clients. We strive to find ways to be an advocate and consultant with all things insurance related. In that pursuit, we are always trying to help our clients stay compliant and take advantage of any resources available to them.
One such resource is the Employee Retention Credit, which is part of the CARES Act. Most companies have heard of the PPP (Paycheck Protection Program) Loans, but in addition to this benefit, the government has also provided a lesser-known tax benefit that is available to most company sizes.
What is an Employee Retention Credit?
The Employee Retention Credit (ERC) is a refundable tax credit available for businesses impacted by COVID-19 through the CARES Act. Businesses can claim on qualified wages, including specific health insurance costs that are paid to employees.
Qualified businesses are eligible to receive up to $26,000 per employee, based on gross wages. Claims can be made on up to 70% of $10,000 paid in wages per employee in 2021, and up to 50% for the same parameters in 2020.
The main goal of the ERC is to encourage employers to keep employees on their payroll despite cutbacks due to COVID-19.
Can My Business Receive an ERC?
Only businesses affected by COVID-19 in one of two ways are eligible for an ERC: 1) your business orders were either fully or partially suspended because of COVID-19 governmental restrictions, or 2) your business experienced a reduction in year-over-year gross receipts of at least 50% in 2020 or 20% in 2021.
The likelihood of your business being eligible for this tax credit is higher than you may expect. Beehive Insurance can provide you with outside resources that can help you determine if you qualify and the estimated amount you can get back in credits.
Businesses of all sizes are eligible for an ERC. However, the amount of credit available is proportioned differently based on the size of your business. Beehive Insurance can connect you with professionals that can help you determine how much of an ERC you can receive – based on a series of intricate details.
Not every business is the same, and the ERC will not apply the same way for everyone. This is a worthwhile topic to fully understand and explore. To ensure you navigate the nuances of the ERC, we recommend you find a professional to assist with the evaluation. Beehive Insurance can help point you in the right direction to assess your eligibility for this credit.