Many businesses of all sizes suffered deeply during the COVID-19 pandemic, an event that needs no introduction to remind anyone of its misery. However, for businesses that kept employees on the payroll during the pandemic, there may be an opportunity to earn an Employee Retention Credit. This is a refundable federal tax credit designed to reward employers for keeping staff on payroll during the pandemic.
Although not all businesses qualify, many do if they suffered from the pandemic and could be eligible for credit up to $26,000 per employee. Despite ending in 2021, this initiative aimed at helping businesses recover from the pandemic’s economic shutdown, make up lost revenue, and continue business operations can still be taken advantage of. Unfortunately, many business owners do not realize that they are eligible.
There are four basic qualifications for employee retention credit. The first is having experienced decreased revenue due to the pandemic during 2020 and 2021. The second is operating within the United States, regardless of organization size. Third is having been subjected to a full or partial suspension from government authorities that significantly impacted a business’s operational practicality. Last is a qualification as a Recovery Startup Business in the third or fourth quarters of 2021. Additionally, it is important to note that employee retention credit requires qualifying wages and varies in amount based on whether an employer averaged above or below their target of 100 or 500 employees in 2019.
While eligibility is not a guarantee, many businesses are eligible for this helpful federal tax credit and do not even know. Whether running a small shop or large scale operation, it is certainly worth looking into employee retention credit eligibility.