Employee Retention Credit
The new COVID Relief bill has allowed businesses who meet the requirements for the Employee Retention Credit to retroactively claim these credits for 2020. Previously businesses who accepted PPP loan funds were ineligible for also claiming the Employee Retention Credit.
Small businesses who were shut down or partially suspended due to government order in general are eligible to claim this credit.
If your business was shutdown or partially suspended during 2020 due to government ordered restrictions, you may qualify for up to $5,000 per employee of a payroll tax credit. This would come in the form of refunds from the IRS if it is applied retroactively (for 2020 wages). If you think you could qualify, do not apply for loan forgiveness for your first PPP loan. There is some strategy involved in maximizing the Employee Retention Credits and what you report as PPP Loan funds used for payroll expenses for loan forgiveness. We will need to run some numbers on your behalf to maximize these benefits.
We have been and are looking into this for our clients. There is no urgency to claiming these credits, but please do not apply for PPP loan forgiveness without notifying us beforehand if your business was closed or partially suspended in 2020 due to government order.
We will be in touch in regards to your eligibility in the coming weeks. Please let us know with any questions.