Fifty years from now, when the history books tell the story of the early 2020s, they probably won’t share how we ate pasta in sheds on the streets of New York or how difficult it was to buy toilet paper (we’d like to forget this ourselves). What they will mention: how small businesses bounced back.
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Own a small business? This overlooked tax credit can help.
Everything you need to know about the Employee Retention Credit and how to apply before time runs out.
Shutterstock / Ground Picture
The economy may be difficult to explain right now, but entrepreneurs have been taking the leap anyway. In 2022, the number of small businesses in the U.S. reached 33.2 million, making up nearly all businesses in the country. Still, even with the growing interest, you’d be hard-pressed to find an entrepreneur who says that owning a small business is easy, especially during the last few years amid the Covid-19 pandemic and widespread shutdowns.
Small businesses faced a litany of challenges at the start of the pandemic, but some relief came in the form of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed into law to establish programs that offered assistance to small businesses during the economic fallout. According to the Small Business Administration, the CARES Act’s signature program, the Paycheck Protection Program (PPP), assisted 5.2 million borrowers in 2020. With the help of these grants and loan guarantees, many small businesses were able to stay afloat.
Under the same law, the Employee Retention Credit (ERC) was also introduced, offering similar aid to small business owners. Initially, eligible businesses found that they couldn’t claim relief from both the PPP and the ERC. What many people may not know is that, since then, several amendments have been made to the ERC regulations, making it more accessible than ever. Despite this, it’s underutilized, with many small business owners unknowingly leaving thousands of dollars on the table.
Use it to expand the business, pay off debts, or hire new talent — the money is there to help your business as you see fit.
The sunset date for the ERC ended in September 2021, but the payroll tax refund can be retroactively claimed until 2024. Time is of the essence, though. Small businesses will no longer be eligible for their full refund at the end of March 2023.
According to the IRS, the refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. Eligible businesses can receive a refund of up to $5,000 per employee for all of 2020 and up to $7,000 per employee kept on the payroll for each quarter for Q1 through Q3 of 2021. That’s a total refund of up to $26,000 per employee, even if the business has received PPP funds in the past.
Unlike the PPP, the ERC is not a loan — it returns the payroll taxes that your business has already paid. Use it to expand the business, pay off debts, or hire new talent — the money is there to help your business as you see fit.
With not much time left on the clock, how can your business claim its refund? Innovation Refunds,* an ERC originator that services small and medium-sized businesses across the U.S., can help your business take advantage of the ERC; in fact, it’s what they specialize in. So far, they’ve already helped small businesses claim over $2 billion in payroll tax refunds. Innovation Refunds offers the help of independent tax attorneys and CPAs to prepare the tax return on behalf of your business and assist you with the filing and claiming process from start to finish. Better still, there are no upfront costs or hidden fees —they don’t get paid until your business receives its refund (a 25 percent fee, to be exact).
As the economy faces new challenges (e.g. inflation, tight labor market, etc.), this infusion of cash could make a huge difference in moving your small business forward. It only takes around eight minutes to find out if your business qualifies for ERC assistance. Don’t wait any longer — claim the money your business deserves today.
Ready to start your claim? Learn more at Innovation Refunds.
*Innovation Refunds does not offer tax or legal advice. We solely provide ERC assistance and recommend seeking advice from our network of highly qualified independent tax or legal professionals regarding your specific situation. Please refer to our Frequently Asked Questions to learn more about eligibility, fees, and other information related to our services.