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ERC Tax Credit Explained

Many business owners faced numerous problems because of the Covid pandemic.One of them was a lack of resources to fund business activities and pay their workers. When some companies faced financial challenges, they decided to lay off some of their employees. The sacking trend continued for some time until the government introduced the employee retention credit to prevent more employees from losing their jobs.

One of the reasons why the government introduced this program was to help small businesses keep some of their best employees.You can also consider seeking this financial assistance if you struggle to pay your workers.Read more to find out more about this tax credit to know whether you are eligible and how you can get the money.

The government introduced the ERC tax credit through the CARES Act of 2020. Through this program, companies with financial challenges had the right to claim half of the money they spent on salaries. After the introduction of the program, interested businesses could claim the money from mid-March and 31st December, and they could get up to $ 10,000 for each worker. There was an amendment to the Act in 2021, and one of the changes made to it was the right to claim up to 70 percent of wages, which employers could get per quarter for that year.

The tax credit can be a good option if you want to retain the best talent in your company but don’t have enough money to pay them. You can benefit from this program even if you didn’t pay income taxes in 2020 or 2021.

But, some companies might not qualify to get this money. So, you need to know whether you are eligible before rendering your application.One of the things that can make you fail to get financial help is the number of full-time employees in your company.The CARES Act only allowed businesses with less than 100 full-time employees to claim the money. But, after the amendment, businesses with less than 500 workers also became eligible.The amended Act also allowed companies that started operating during the pandemic period to claim the money. However, only start-up companies with gross receipts under $ 1 million and those with at least one or two W2 workers were eligible to seek financial help.

It might be a good idea to apply for this service if you are eligible. The financial assistance you get will enable you to continue paying hard-working employees so you don’t lose them.Contact the relevant organizations now and start the application process today.