Newtek Business Finance Solutions
The CARES act and American Rescue Plan contained key provisions to help business owners during the COVID-19 pandemic. One piece of relief you may have overlooked is the Employee Retention Credit (ERC).

Here are a few key highlights of the ERC:
  • Fully refundable payroll tax credit - if claimed for a prior period for which all employer payroll tax obligations were met the employer can receive a check for the amount of its ERC.

  • 2020 ERC - 50% of the first $10,000 of wages (as defined for FICA tax purposes) and health plan expenses (employer premiums and employee pre-tax premiums for medical, dental and vision coverage) for all of 2020 with a maximum ERC of $5,000 per employee for 2020.

  • 2021 ERC - 70% of the first $10,000 of wages (as defined for FICA tax purposes) and health plan expenses (employer premiums and employee pre-tax premiums for medical, dental and vision coverage) with a $7,000 per employee per calendar quarter maximum ERC and a $28,000 per employee maximum ERC for all of 2021.

  • Available to eligible employers regardless of whether they or a controlled group member obtained forgiveness of a Paycheck Protection Program (PPP) loan - however, cannot use the same wages of the same employee to both obtain forgiveness and to claim an ERC.

  • ERCs can be claimed retroactively for a past period for up to 3 years by amending the original Form 941 by filing Form 941-X.

  • Employer can be eligible by virtue of:
    • Significant Decline in Gross Receipts - a significant decline of its controlled group's gross receipts for 2020 and/or 2021 quarters as compared to its gross receipts for the same quarter(s) in 2019 (a greater than 50% decline is required for a 2020 ERC and a greater than 20% decline is required for a 2021 ERC); or
    • Partial Suspension of Operations - a governmental order places restrictions on the operations of a trade or business that has more than a nominal effect (unless the employer able to conduct comparable operations via teleworking).
  • "Small employer" can count all wages and health plan expenses towards the $10,000 maximum.
    • 2020 ERC - 100 or fewer full-time employees on average in the employer's controlled group.
    • 2021 ERC - 500 or fewer full-time employees on average in the employer's controlled group.
For your convenience, we have posted the full update from the IRS on our website here.

We understand this a lot to digest, therefore we encourage you to reach out to your accountant to see if you are eligible for the ERC and to have the details explained in more detail.

The team at Newtek Payroll & Benefits in knowledgeable in the ERC has been guiding their clients toward this oft overlooked benefit. If you would like to learn more about the concierge level service they offer, with a human touch, call 855-763-9835 or email info@newtekone.com.
Contact:
Newtek Business Finance Solutions
800-749-8707
info@newtekone.com