Let’s get something straight right out of the gate: The Employee Retention Credit (ERC) is FREE money for small businesses just like you. I think it’s important to clarify that from the get-go, because doing research on something as significant as the ERC tax refund can be tedious. But when the result of that research is a few hundred thousand dollars, you might be a little more motivated to dig up those payroll reports from 2020 and 2021.
And here’s what’s astonishing: did you know that according to National Federation of Independent Business (NFIB), only 4% of business owners are even aware that the Employee Retention Credit exists? This is an outrageous statistic, because we’re talking about $400 BILLION just waiting to be given out to small business owners who apply. Talk about a hidden gem.
You DESERVE This Money
A truer statement has never been spoken. Businesses during COVID got the royal shaft up the ass. Especially certain industries like gyms, movie theaters, hair and health salons, bars and restaurants. The list goes on and on.
What irked me the most about these government shutdowns was the hypocrisy of the rules. You could fly cross-country for five hours sitting six inches away from a person on each side of you, but restaurants weren’t allowed to have people come in and sit at tables ten feet away from each other. This is the definition of industry discrimination. Airlines can keep operating and stay in business, but not restaurants or other such business that provide services to the public.
Anyway, I’m getting heated and off track, so I digress…
So, in this article, I’m going to provide you all of the information and ins and outs you need in order for you to apply for the ERC tax refund so that you can jump on this monstrous opportunity. What that means is I’m going to answer your questions, I’m going to show you how to file, as well as provide my suggestion for the best ERTC service to file a claim with, based on my research. And if you do file that claim, you’re looking to have a large chunk of money deposited directly into your bank account and pumped right into your business.
“According to one survey, one in three business owners said there was no way they could survive more than three months without acquiring more capital or unless there was a change in the business conditions.“
Why Should You Listen to Me?
Oh yeah, by the way, my name is Dave Allred, founder of this website (Bar Patrol). My niche is the bar and restaurant industry (which is why I got so heated earlier), so I spend my time providing my audience with tips, tricks and advice on running a more successful bar and restaurant. The ERC tax refund is just another way for me to help, and I have done some extensive research on the best way for you to get the most money possible. And if I can earn your trust, then I gain another follower and you gain a large chunk of change. Win-win.
So whether you’re a bar or restaurant, or a small business in a completely different industry, the steps and the requirements are almost exactly the same, so read on.
What is the Employee Retention Credit Exactly?
The ERC (or ERTC) is a refundable tax credit paid back to qualified business owners as an incentive for keeping their employees on during the pandemic. The ERC was created by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) as a refundable credit that small business owners can claim on qualified wages paid to their W-2 employees.
In other words, if you kept your employees on during the pandemic, and they are W-2 employees, you can get gobs of money back as a tax refund. The government is actually rewarding you for keeping your business and the economy alive, and I have to say I respect that. Yay!
Is the ERC and the ERTC the Same Thing?
Yes. I’m not sure why they don’t just call it one or the other. The “T” is just thrown in so you know it’s a tax credit. So the ERC is the Employee Retention Credit and the ERTC is the Employee Retention Tax Credit. They are interchangeable.
Do I Have to Pay the ERTC Money Back?
We already talked about this, but let me be clear for those of you who need certainty in your lives: Absolutely not! The ERC tax credit is like grant money that is given to you and never has to be paid back. Uncle Sam is handing out freebies, so make sure to get yours.
Who Qualifies for the ERTC?
First starters, the ERC was mostly created for small businesses, so if you’re a corporation beast with more than 100 employees, scroll down just a bit and I’ll tell you how you qualify. Besides that, there are two ways for businesses to qualify:
1. If the business was fully or partially shut down during the 2020 year after March 12, because of a government mandate. This includes ANY significant change the business had to make, including:
- A business that ordinarily met with clients in person had to cancel meetings due to COVID-19.
- A restaurant was forced to close and/or limit its on-site dining capacity due to COVID-19 restrictions.
- Supply chain interruptions caused your business to have delayed production timelines.
- COVID-19 restrictions lowered the amount of people who could attend an event with your business.
- Your business had to reduce operating hours due to COVID-19 cleaning requirements and restrictions.
2. If you had a significant decline in gross receipts, you qualify. This will be compared to your 2019 sales, and a “significant decline” is defined as a 50% decline in receipts compared to the same time period of the previous year.
If you are anywhere in the ballpark of either of these two, make sure you file a claim because (did I mention?) it’s free money, so what do you have to lose.
What is Considered “Small Business” for the ERTC Refund?
First off, it may seem obvious but if you have zero employees, you do not qualify for the ERTC. Just want to cover all bases here. In order to be eligible for the Employee Retention Credit in 2020 you must have fewer than 100 employees, and for 2021 fewer than 500 employees.
Any businesses with more employees than this during those two time periods can only recover wages paid out to employees who were not working or providing any services for the business. In other words, the business was paying them out of generosity and to keep them on their staff for the future.
Are Tips Considered as Qualified Wages?
Yes! This is great news, as long as your staff declared their tips properly. The IRS has determined that tips can be included in qualified wages as long as these wages were subject to FICA. In other words, if an employee’s tips are over $20 in a calendar month (and how could they not be for your severs and bartenders), then all of their tips can be included in qualified wages when it comes to the ERTC. On the other side, any tips amounting to less than $20 in a calendar month are not subject FICA wages and do not qualify for the ERTC.
How Much Money Are We Talking About Here?
Not surprisingly, this depends on your situation. In short, the total claimable amount per employee, across all 6 quarters that are eligible (quarters 2, 3 & 4 of 2020 and quarters 1, 2 & 3 of 2021), is $26,000 per W-2 employee. That means if you have 10 employees qualify, that’s $260,000 in your pocket. At this time, the average claim per employee is about half of that though.
According to ERCHelpDesk.com, they have told me that their average claim is $150,000. But truth be told, I have helped a lot of businesses make a claim, and so far those claims average out to $259,000. It really does depend on the size of your business and your payroll during those times.
It’s important to note that the credit applies only for the portion of the quarter (or quarters) the business is suspended. If the government suspension/shutdown was extended throughout all of the qualifying quarters, then you would qualify for all of those quarters. If it was only for part of the time, you would qualify for that time period.
Will the ERTC Fund Run Out of Money?
As mentioned earlier, with the ERTC, the IRS has allocated $400 Billion to help small business owners. As of the end of 2022, they’ve only gone through about 25% of that. Not to mention, hardly any businesses really know about it so the chances of running out of funds is highly unlikely. With that said, the faster you start the process, the more likely you are to get a larger piece of the pie.
Can I Still File a Claim Even Though it’s 2022/2023 Now?
At this time, yes. The Employee Retention Credit is available to businesses who qualify for the last three quarters of 2020 and the first three quarters of 2021. The tax return for the second quarter of 2020 was due July 31, 2020. What that means is you can now amend these returns and request a refund until July 31, 2023.
They are even saying that you might have until 2024 to file retroactively. But at this point the laws and the rules keep changing and the lines keep blurring, simply because this is new territory for us, so you’ll want to make sure not to sit around with your thumb up your ass putting it off. Get moving so you can get your money.
What if I Already Received a PPP Loan, Do I Still Qualify?
Yes. The answer to this used to be no, but in December of 2020 the Taxpayer Certainty and Disaster Tax Relief Act of 2020 was enacted. One of the changes in that act included a modification that permits a company to have a PPP loan, and also be able to take advantage of the ERTC refund. You’ll need to see how much you qualify for once you submit a claim.
Can’t I Just Have My Accountant Take Care of This?
Only if they are an expert in this area, but that is extremely rare. For the Employee Retention Credit, you really need a specialist who is able to get you the maximum amount of money. It is very likely that a CPA will miss important information that will get you more money. We’re talking 10 – 15% more money. This is an area of specialized knowledge, and you’re going to want someone who knows what they are doing.
A qualified ERC service will evaluate your business to see if it qualifies for the ERC Program. If you do qualify, they will tell you how much you should receive, as well as any additional factors that need to be navigated in this complex process. Simply put an ERC expert makes the process much easier.
“Did you know that only 8% of business owners took advantage of the ERTC in 2020, and only 10% in 2021? It’s free money. What are business owners waiting for?”
How Do I File for a Claim for the Employee Retention Credit?
Filing to find out how much money you might qualify for is a relatively simple process. Simply click here and you will be taken to a simple form to fill out like this one so you can get an estimate of your refund.
Once you complete that simple first step, experts will guide you through the procedure and tell you exactly what they need from you to complete the process. Some common documents you will need to have in order to upload into their system are:
- 941 tax documents
- Quarterly payroll reports
- Gross quarterly revenue
Again, they will guide you right along like a riverboat tour guide floating lazily down the Mississippi.
How Long Do I Have to File a ERTC Claim?
The employee retention tax credit (ERTC) allows you to claim a refund for the last three quarters of 2020 and the first three quarters of 2021. Based on general tax laws, the employer’s tax return for the second quarter of 2020 was due on July 31, 2020. What that means is that you can amend those tax returns and request a refund up until July 31, 2023.
When it comes to the payroll tax return for the third quarter of 2021, that was due on October 31, 2021, which of course has already past. Don’t fret your pretty little head though. You still have until October 31, 2024 to amend those returns and request a refund.
With that said, it’s best to jump on it now so you don’t forget. Not to mention, it is going to take awhile to get your refund deposited into your bank account, which leads right into our next question, which is…
How Long Does it Take to Get My Refund?
At this time, refunds are taking anywhere from 6 – 9 months to show up in the business bank account. This might seem like a long time, but who gives a crap? That’s your money in the bank. Just pretend it’s in your savings and you’re not allowed to use it until 6 – 9 months from now. With luck, you’ll have it before Christmas 2023.
Is My ERTC Refund Going to be Taxed?
Great news here. The money that you will get back from the ERTC is NOT considered taxable income. I REPEAT: You will not be taxed on the ERC refund. Also, do not include it in your gross income for the tax year in which you receive the money. With that said, the money you receive from the ERC does impact your deductible wages for the tax year in which you paid ERC-qualifying wages.
This is only one of the many reasons you’ll want to find an ERTC service to help you navigate all of this. For people like you and me it’s a complicated process. For them, it’s like a walk on the beach.
Does it Cost Money For Me to File an ERTC Claim?
With the company I recommend, ERCHelpDesk.com, the answer is no. Some services will require an upfront payment or deposit, but you shouldn’t go with them if that’s the case. The initial claim and analysis, as well as the estimate of how much you will get back, should be completely free.
After you are approved for your claim, the service will take a percentage of that claim. Most companies charge 30 – 40%, but ERCHelpDesk only charges 15 – 20%, which could be an extra $20,000 – $30,000 in your pocket, based on the average claim size.
What if I Own Multiple Businesses?
If you own multiple businesses that are separate but under the same ownership, and they meet IRS Controlled Group criteria, all businesses must be evaluated together for eligibility. Then, if all of your businesses qualify, all businesses are eligible for the ERTC. If not, none are eligible. I know, crazy, right? Pretty much an “all or nothing” situation. But if your businesses do qualify, then the ERC refund will be calculated and filed separately for each location.
What is the Recovery Start-Up Business, and do I Qualify?
If you started a business right in the middle of COVID, you might qualify for a refund. This is sort of a narrow and limited field of businesses, but if it describes you, jump on the money train.
The Recovery Start-Up Business is defined as:
- A business that opened after February 15, 2020.
- A business with annual gross receipts, within a specified time period, that averaged less than $1 million.
If this describes you, you could qualify for up to $50,000 for each quarter of wages paid during that time period. You’ll want to make sure to ask the ERC service you go with, as they will have all the answers for you.
Can I Qualify For ERTC if I Actually Made More Money in 2020?
Believe it or not, the answer is YES! Just like any other business, as long as you qualify for one of the two qualifications when we talked about Who Qualifies for ERTC? You are not discriminated against for making money, which is amazing.
What Forms or Documents do I Need to Qualify for the ERTC?
Now, don’t get squeamish here. I understand that going back and pulling up all of your past documentation is not fun, unless you have a super-organized system in place, in which case you’re like, “No problem, man. I got this.”
Just think about how hard you work for your money, and how much you make per hour if you were to break it down. Then think about how much per hour you’ll make here just by submitting a few forms. Maybe like $75,000 per hour? You’d be a numbskull to turn down that sort of labor.
Back to the question though. For forms and documents, you’ll need to submit a series of tax forms to apply for the ERC, including IRS form 941, which is your quarterly federal tax return. You’ll need to submit for the quarters in which you paid ERC-qualifying wages. In addition to Form 941, you also might need some or all of the following:
ERC Tax Forms and Documents You Need
- Form 7200, which is a request for an advance payment of employer credits Due to COVID-19
- Financial documents showing money you may have received for relief during COVID, including grants or government-funded medical leave credits
- Written proof of the government mandate that forced your business to shut down or be limited in some way
- Quarterly financial records for 2019, 2020 and 2021 (for whatever quarters you qualify)
- PPP loan applications you submitted, including applications for loan forgiveness
Why Should I Choose ERCHelpDesk?
What I like about ERCHelpDesk is that they are a smaller business (like you perhaps?) who specializes in this field and nothing else. The feedback I’ve received about them is that they are not only great at what they do, but they are ethical and charge a reasonable commission compared to most of the other ERC services doing the same thing.
In other words, the people at ERCHelpDesk are personable and are there to guide you along the path until you get your money. In addition, there is no risk for assessing how much money you may or may not receive. They don’t make a dime unless you get paid, and in my opinion, that’s the only way this type of business should be done.
It’s Up to You Now…
As the Lorax said to the little boy at the end of the classic Dr. Seuss book: “UNLESS someone like you cares a whole awful lot, nothing is going to get better. It’s not.”
Translation: just like with anything in life, only by you taking action will something good happen. So don’t just sit on your backside complaining that nothing good ever happens to you. This is a chance for you to file a claim and wake up with a gigantic gift in your stocking.
If you have any questions at all, you can email us at in**@*******ol.net, but it’s probably a better option to go ahead and contact the experts at ERCHelpDesk.com because they are the ones who will help you get your money.
Thanks for stopping by.
Cheers,
Dave