The global pandemic was a stressful period for many businesses. The enforced closures and changes to opening hours, not to mention the ability to provide advertised services and source products, put a huge strain on business owners to continue to employ staff and pay wages, despite not making their usual profits.
Sadly, this led to many businesses having to close their doors. However, for those that have managed to struggle through but have experienced stunted growth and therefore, an inability to hire more staff, the IRS has come to the rescue in the form of the Employee Retention Credit scheme.
The scheme was designed to help business owners to claim back a portion of the wages that they’d paid out over years 2020 and 2021. Many business owners, such as Myrtha Chang, opted to pay their employees throughout the whole period despite their reduced hours to maintain the excellent staff they already had.
Ms. Chang stated, “My business, Mathnasium, is a tutoring center in Newton, MA, designed to revitalize math learning. I had a group of fantastic tutors, but understandably, during the pandemic, there was less need for them as remote learning became more prevalent. I was in a sticky situation because I didn’t want to lose my team, but I had less work for them to do. I opted to still pay out so I could retain them, but this left me paying wages with ever declining income.”
ERC was the savior for Ms. Chang. It was originally brought into play to allow businesses to claim up to 50% of the employees’ wages back. Meaning they could retain a little more profit. Due to the extension of lockdown and government restrictions on many businesses, this amount was then increased to 70% of each employee’s wage per quarter for certain industries, meaning that companies experienced minimal detriment for opting to keep their staff and pay them in full. This IRS scheme was intended to keep as many people in work as possible and reduce the effects of Covid-19 on the job market. The scheme is even relevant to people under the Paycheck Protection Plan (PPP).
Often, with similar schemes, there is a multitude of hoops to jump through in order to secure these payments. But ERC is different. The Chief Revenue Officer at ERC Benefits, a company created to help businesses make back some of their losses, confirms that the criteria to qualify for Employment Retention Credit, are actually much lower than many business owners expect. Each business simply needs to prove that they’ve earned at least 20% less than they normally would have throughout the pandemic, showing a clear loss of earnings. ERC can even be granted to businesses that started trading after 2020, simply by showing expected earnings and forecasting and then showing proof of earnings.
“I always thought schemes like this were too good to be true and would be a nightmare to apply for, but with the help of ERC Benefits, I managed to get my documents together and send them off almost immediately. I couldn’t believe the amount I was entitled to and was even skeptical right up under the check cleared in my bank account. It’s really saved my business and has given me the opportunity to continue to grow without having to worry about funding,” Ms. Chang claimed it was one of the best decisions she’d made for her business.
The Employee Retention Credit scheme was launched initially in March 2020 and has gone through numerous changes since then to ensure maximum benefits for businesses based on the changing government restrictions. The scheme is due to end at the end of 2023, as most businesses are now, thankfully, starting to get back to normal. However, you will still have the opportunity to claim retroactively right up until the end of 2024.
If you’re seeking help, support, or advice regarding your eligibility to claim, or need assistance on providing relevant documents, contact ERC Benefits at 561 680 4677 or visit their website to find out how you can get your IRS free funding.