What You Don't Know About The ERC Could Be Holding You Back
Many people have misconceptions about the Employee Retention Credit (ERC) program and the CARES Act. These misconceptions can lead to missed opportunities for businesses to receive much-needed financial support during these challenging times.
One of the most common misconceptions about the ERC program is that it's only available to large corporations. In reality, the program is available to businesses of all sizes, including small businesses and nonprofit organizations. Additionally, many people believe that if they received a Paycheck Protection Program (PPP) loan, they're not eligible for the ERC program. However, businesses that received PPP loans can still be eligible for the ERC program, though the PPP wages have to be omitted from the calculations to avoid double-dipping.
Another common misconception is that the ERC program is only available to businesses that experienced a full shutdown due to COVID-19. While a full shutdown can be one of the eligibility factors, it's not the only one. Businesses that experienced a significant decline in revenue or impacts from partial shutdown orders due to COVID-19 can also be eligible for the program.
5 Things Some Business Owners Didn't Know
Here are five things that even the experts miss:
1. The ERC program can be used even with some other tax credits. For example, businesses that hire veterans or individuals with disabilities can claim the Work Opportunity Tax Credit (WOTC) in addition to the ERC program. By supplying your WOTC information to our specialists, we will ensure you maximize the credit without double dipping.
2. The ERC funds can be used for any purpose, including to cover the cost of health insurance for employees. This is a significant benefit for businesses that are struggling to cover the cost of health insurance during these times of high inflation.
3. The ERC program can be claimed for the 2020 tax year and the 2021 tax year. This means that businesses that weren't eligible for the program in 2020 may be eligible in 2021 if they experienced business impacts due to COVID-19 government orders.
4. The ERC program can be claimed on an amended payroll tax return until April 15, 2024 for 2020 wages and until April 15, 2025 for wages paid in 2021. This is good news for businesses that didn't claim the credit on their original tax return but are now eligible.
5. The ERC program can be claimed by businesses that are receiving other forms of government assistance, such as state grants or loans. However, business owners should speak with a tax professional to ensure that they're not double-dipping and claiming the same expenses twice.
Who Can Apply?
Now that we've dispelled some common misconceptions and learned some surprising facts about the ERC program and the CARES Act, let's take a closer look at who can apply for the program. As previously mentioned, the program is available to businesses of all sizes, including nonprofit organizations. The program is also available to businesses that experienced a significant decline in revenue due to COVID-19 or full or partial shutdowns of their operations. By dispelling these misconceptions and learning more about the program, businesses can make informed decisions about whether or not to apply for the credit.
If you believe that your business may be eligible for the ERC program, reach out to DUB Financial. With our specific experience in the ERC and CARES Act, DUB Financial can help you determine if you meet the eligibility requirements and walk you through the application process. With the right guidance, you can take advantage of this valuable program and receive the financial support that your business needs to thrive.