Who will be part of your business team? That is one the core questions we recommend our Geyer Law clients ask themselves as we help them formulate their business plan. Because, since 1999, our firm has represented business owners, helping to not only form businesses, but providing succession planning. Our goal is help owners avoid costly mistakes and take advantage of tax planning opportunities.
Back in 2021, Nick Sullivan of Sullivan Business Solutions helped our blog readers understand the Employee Retention Credits provided as part of the CARES Act. With the deadline for filing ERC claims for 2020 only a year away, (ERC claims for 2021 must be filed by April 15, 2025), we turned again to Sullivan to help review the opportunities available to business and practice owners….
By way of background, ERC is part of the federal pandemic relief package, meant to encourage employers to keep employees on the payroll. Both private employers and nonprofits are eligible, if they experienced a significant decline in gross receipts as a result of the coronavirus.
How does the credit work?
Qualifying employers receive ERC refunds directly from the IRS, with each qualified employee bringing up to $26,000 in potential tax relief to the employer.
Sullivan shared some real-life examples from his own client base, including a dental office with ten employees who qualified for an ERC refund of $120,000, a baking company with eight employees who qualified for $70,000, a church with six employees who qualified for a credit of $78,000.:
The IRS website summarizes the opportunity as follows:
“The Employee Retention Credit (ERC) is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to Dec. 31, 2021.”
– by Ronnie of the Rebecca W. Geyer & Associates blog team