ERC Is the Largest, Most Generous Support for SMBs Since PPP
For businesses that have seen a drop in receipts of over 20%, the ERC offers substantial, generous support for SMBS that are dealing with the fallout from COVID-19. Business owners should carefully investigate if their business is eligible to participate.
What are the benefits?
A business with 15 employees is eligible to claim credits as follows:
- Maximum eligible wages per employee: $10,000 per quarter
- Maximum credits per employee: 70% of eligible wages
- Number of eligible quarters in 2021: 4
- Total Potential Credit:
15 Employees x ($10,000 wages x 0.70 Eligible) x 4 Quarters = $420,000 of credits to support wages
Here’s an additional example demonstrating an employer’s ability to defer the deposit of all of the employer’s share of social security taxes and a reduction in employment taxes from the IRS website:
Example: Employer E paid $10,000 in qualified wages (including qualified health plan expenses) and, after deferral of the employer’s share of social security tax, is otherwise required to deposit $8,000 in federal employment taxes for all of its employees for wage payments made during the same quarter as the $10,000 in qualified wages. Employer E has no paid sick or family leave credits under the FFCRA. Employer E may keep up to $5,000 of the $8,000 of taxes Employer E was going to deposit, and it will not owe a penalty for keeping the $5,000. Employer E will later account for the $5,000 it retained when it files Form 941, Employer’s Quarterly Federal Tax Return, for the quarter.
The Benefits of the ERC program warrant attention to determine eligibility.