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Employee Retention Credit - A Lifeline for Businesses

For many businesses, the last few years have been difficult. The Covid-19 pandemic led to lockdowns and government restrictions which meant that opening times, resources and conversion were all affected. As a business owner, it may have been difficult to stay afloat and retain employees with the pressure to pay them for hours that they weren’t able to fulfill.

In order to support businesses and keep the job market booming, the IRS Employee Retention Scheme was created to cover 2020 and 2021. This was for business owners to claim back some of the wages that they’d paid out to employees if they had continued to pay them whilst not receiving any profit.

Myrtha Chang, the founder of Mathnasium, a tutoring center based in Newton, MA, was one business owner who really struggled to retain staff due to loss of work.

“During the pandemic, the need for tutoring services decreased with many children being told to stay at home and access education remotely. This was a massive blow to the business, as I had accumulated a number of really amazing tutors that I knew I would need once the restrictions had lifted, but I couldn’t really afford to pay them. I chose to take the leap and pay them in full for the hours they’d lost out of fear of losing them to other professions, which could potentially hurt my business more in the long run.”

Choosing to pay employees is great for their cost of living and meant that Ms. Chang wasn’t in a difficult recruitment situation later but did leave her at a deficit which threatened to ruin her business.

Opting for Employee Retention Credit was her savior. She contacted ERC Benefits, a company supporting businesses to claim the funds owed. This meant she was able to get a lot of those lost funds back.

“I skipped all the way to the bank when the checks came through. I really never thought I would be eligible for so much and I always assumed schemes like this would make you jump through hoops to qualify. I couldn’t have been more wrong, and the extra money has helped to save my business, meaning I can now focus on future growth.”

Employee Retention Credits allow businesses to claim up to 50% of each employee’s yearly wage back from 2020. This means you’d get half of the wages that you’d paid to employees of the year back into your account. By 2021, the lockdowns had increased and become more damaging to some businesses, which then led to the IRS raising this credit to up to 70% of each employee’s wage per quarter – helping even further towards this profit deficit.

The Chief Revenue Officer of ERC Benefits stated, “Many people assume that these types of schemes are difficult to apply for and that the criteria to qualify are highly specific. However, all businesses need to do is prove a significant effect on their profits over the 2 years.”

To claim Employee Retention Credit, businesses must simply prove that their profits were at least 20% lower in years 2020 and 2021 than they would be normally, signifying that the pandemic has affected their ability to grow and make a profit.

Businesses that launched during the pandemic may even qualify if they can display a significant detriment based on their forecasts and predictions for the coming years, even if there’s no previous evidence of profits.

The ERC scheme was launched in March 2020, initially to assist businesses in making their payments. It’s due to end in 2023 when most businesses should hopefully be more stable. However, you haven’t missed the boat if you’d still like to apply, as the scheme will accept applications right up until the end of 2024 for the years affected.

If you’d like advice and support regarding Employee Retention Credit or need some assistance regarding the provision of documentation, ERC Benefits are ready and waiting to help you move forward and repair your finances. Contact them today at 561 680 4677 or visit ercbenefit.com.

Reve News Media