Your business is running out of time to claim the Employee Retention Credit. The credit appeared as part of the CARES Act. The benefit was available in 2020, beginning in the second quarter, and for the first three quarters of 2021. If you did NOT take advantage of the credit you can claim it before July 2023.
The ERC still has funds available for small to medium-sized businesses. The IRS has some guidance on which businesses are eligible. You can find out more at IRS.gov. You will notice the IRS instructions, when you click on the details, can be complicated. You can also check the Hito blog for information.
On the one hand, the basic requirements to take advantage are fairly straightforward. It is the process isn’t? In general, a company that had a full or partial shutdown due to COVID-19 along with a shutdown order from an “appropriate governmental authority” may qualify. Other ways to qualify include having a significant decline in gross receipts or being a start-up business in the third or fourth quarters of 2021.
There are limitations on what wages qualify as well. These include; “Wages reported as payroll costs for PPP loan forgiveness or certain other tax credits can’t be claimed for the ERC in any tax period.” The certain other tax credits list is where you can run into trouble.
You should also be aware that filing in 2023 may mean some delays in getting the money. The Business Journal has an interesting article on delays in receiving money. The Business Journal piece suggests that “fly by night” operations filing for businesses may be part of the problem. They also have some good news in the piece, which is worth a read.
Waiting until the last minute is not a good idea if your business qualifies for the ERC. Just gathering the necessary documentation can be time-consuming. Please contact us for help in filing your ERC claim.
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