What is ERTC?
The Employee Retention Tax Credit, commonly referred to as ERTC, was established as part of The Cares Act. It is a refundable tax credit made available to businesses that paid employees during the economic hardship brought on by covid-19. Since the ertc is not a loan, there is no repayment.
In 2020, employers can receive a credit of 50% of qualified payroll expenses, up to a maximum of $5,000 per employee.
in 2021, employers can receive a credit of 70% of qualified payroll expenses, up to a maximum of $7,000 per employee, per quarter.
Who is Eligible?
Every type of business entity is eligible for the ERTC. This includes non-profits and start up businesses as well.
Businesses can qualify for the ERTC by meeting one of the two following criteria:
- Full or partial government-mandated shutdown
- Revenue decline:
- 2020: If business revenue declined 50% or more in any one quarter of 2020, as compared to the same quarter of 2019.
- 2021: If business revenue declined 20% or more in any one quarter of 2021, as compared to the same quarter of 2019. In this scenario, the business would qualify for the next two quarters.