I don’t know if you have realized, but the news over the last year or so has largely not been of the good variety. This certainly can get to a point where we need to take a break and tune out, paying little attention to the world and more attention to ourselves. This is only a good and necessary step to take when necessary. We should also be sure to plug back in at some point, though, for staying on top of news and not becoming numb to it can lead to unexpected benefits.
For example, I think a lot of people were much more attentive to the government’s first stimulus package than the second. That first one felt big and great – direct stimulus payments, PPP loans, EIDL loans, WE CAN DO THIS! The second one also seemed big and great, but once we found out how much we would personally receive in that direct stimulus payment, we largely shut down and ignored the rest. For individuals, that was probably good enough. For businesses, you may be leaving money on the table.
A big part of that missed opportunity comes in the form of the Employee Retention Credit (ERC). That term may sound familiar because it was part of the original CARES Act that everyone paid more attention to. It was quickly forgotten by many, though, for the original rules said that a company could only qualify for either a PPP loan or the ERC. The PPP loan was a better option for most, so they dove into that realm and found great success, receiving a loan that if used correctly would not have to be repaid.
When the second stimulus package was passed at the end of 2020, though, it allowed for businesses that received a PPP loan to also qualify for the ERC. This is not a small matter, either, for it could be worth up to $5,000 for each full-time employee retained from March 13, 2020 to the end of the year and up to $14,000 for each retained employee through the first six months of this year.
Now there are a lot of twists and turns as to how to qualify for this credit and this space does not allow for me to cover them all. (Here is a link to a Forbes article and to one on Investopedia if you want to delve deeper.) To hit a couple highlights, though:
This means that a lot of businesses qualify. It also means that some numbers need to be run to determine that eligibility and then how to maximize the benefit when it comes to what wages to apply to PPP forgiveness and what wages can then be used to receive the ERC. If you want to start looking at those numbers, though, please contact us for further guidance.
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