Employee Retention Credit: Driving Thousands Back to Small Businesses
The pandemic was and still is a difficult time for all of us, and we saw small and large businesses alike under siege from a range of different challenges. If your business isn’t selling hand sanitizer, masks, or named Amazon, you likely have seen rocky times. Many of us had or still have declining revenue, trouble finding or keeping employees, supply chain interruptions, and even closures. If you still have your doors open, take a moment and be proud.
Today, with new variants and protocols constantly changing, things still aren’t back to normal. Many of us are still recovering. While we hope and pray the worst is behind us, we still have continued uncertainty. The government knows that our economy needs relief. I would like to briefly take a moment and realize that while “the economy” sounds like a defined financial system of business, we should never forget that when we say “economy” we are actually referring to human beings. People with rent and mortgages to pay and groceries to buy. The health of the economy is the health of not only our businesses but our families, our friends, our neighbors, our communities.
Enter the Employee Retention Credit (ERC). Money waiting for you and your business to claim. Money with no restrictions on use, with no requirement of repayment. Money you could use for hiring or retaining employees, buying new equipment or materials, or even just having a better financial safety net for you and your business. Giving money to businesses that need it is a simple idea, but a complex process to claim the funds. Enacted as part of the 2.2 trillion-dollar economic stimulus bill, the ERC was developed to reward employers for paying employees during the pandemic by subsidizing wages paid. While the word “credit” in the name refers to a tax credit, businesses that receive ERC funds are actually issued a check from the U.S. Treasury. How much is the credit? For 2020, you can still claim 50% of wages paid to your employees by amending old returns. For 2021, this went up to 70% (up to $10k) per employee, per quarter. That’s $7k per employee per quarter!
Hear more about Greg’s experience
Many of the clients I have helped claim these funds were very skeptical at first. They had doubts they would qualify or thought the process would be too time-consuming and not lucrative. Some businesses even had their own CPA or advisor tell them they didn’t qualify. I insisted those business owners allow me to have a closer look, and they are now waiting on their checks. Greg Brockman, the owner of Magnum Companies, a steel fabrication company that does construction work and public art projects, had the same skepticism.
“We really needed the help,” said Brockman. “We were losing employees mainly because we just didn’t have enough work. We had a downturn in the volume of work, but the big part for us was the delays. The pandemic caused so many problems on job sites. But the ERC helped save us. I get why people would balk and say, ‘It’s too good to be true,’ but it’s real. It’s not a smoke and mirrors thing, it’s what our government should be doing to help small businesses. Thank goodness it’s there. It would have been devastating for us had we not done it.”
Greg has advice for other businesses. “For companies that have not heard of this, or haven’t taken advantage of it, I would strongly encourage them to take a look at it. In 15 minutes, you can get the gist of it, you really can. And if you have a professional that’s already done tons of these, they’ll manage it and do it for you. They took care of everything for me. It was seamless. I just stepped out of the way and let them do their work. Money came in and kept us afloat. It made a huge difference. I can’t imagine where we would be right now had we not done this program. If you are even thinking about it, considering it, hearing about it, talk to a professional.”
Eligibility is determined quickly and easily by a professional. You are still eligible even if you received a PPP loan or your revenue didn’t show a decline.
Hear more about Ted’s experience
Another business I had the privilege of helping was Spectex, a linen and laundry service business, owned by Ted Miotke here in the Valley. “Not knowing how things were going to end up, that was very stressful.” Ted talks about his first impressions of ERC when I introduced him to it. “I had to have Bart explain it to me several times because it didn’t sound realistic. Knowing a lot of other business owners, [we] get hit with things all the time that are too good to be true.”
Ted’s message to other business owners was also clear. “I would highly suggest [businesses] take a look. If you think you ‘have a guy on it’ or ‘your accountant is all over it’, there’s a lot of stuff that’s moving, changing day-to-day on these programs. [ERC] has meant the difference for us as far as whether we were going to stay in business or not.” Ted explained.
I am not exaggerating when I say, a 15-minute phone call could mean hundreds of thousands of dollars for your business. We are so proud to be a Valley company helping other Valley companies. Let’s chat about how the Employee Retention Credit can change your life. If you have any questions at all, please do not hesitate to reach out. Interested? You can contact Bart Dunne at 1-800-983-1819.
Bart Dunne began his journey working in finance for an international firm in Silicon Valley. He played a significant role in growing a large franchise business. He has consulted for hundreds of local companies as an outsourced CFO and CPA. His company, Relentless Accountability, is located in Mesa.