Throughout the past year, numerous laws and regulations have been enacted to support business and nonprofit organizations. The CARES Act, Coronavirus Relief Package, and the most recent American Rescue Plan Act (ARPA) provides unique relief for employers through the Paycheck Protection Plan (PPP) and through the Employee Retention Credit (ERC). These programs can be a lifesaver for your business or nonprofit and keep people employed in a time of great uncertainty. They can also, however, be intimidating and require calculations and reporting that could confuse even the most experienced professionals. Kruggel Lawton CPAs are here to make this easier. We want you to be able to focus on your business and your mission, and not have to worry about the intricate details of tax laws and regulations.
Most recently, ARPA specified new regulations related to the employee retention credit that could provide financial benefits to your business and nonprofit organization. Specifically, the Employee Retention Credit (ERC) was extended from June 30 to December 31, 2021. The ARPA continues the ERC rate of credit at 70% for this extended period of time. It also continues to allow for up to $10,000 in qualified wages for any calendar quarter. Taking into account the Consolidated Appropriations Act extension and the ARPA extension, this means an employer can potentially have up to $40,000 in qualified wages per employee through 2021.
Determining your ERC requires producing several figures and some documentation. We have made the process slightly easier for you by creating a worksheet to help you collect the information.
To complete the Employee Retention Credit Worksheet and unlock the ERC, you will need to collect the following information.
Additionally, you will need to collect financial information related to the gross receipts from your business or nonprofit organization from April 1, 2020 through December 31, 2021.
Gross Receipts FOR-PROFIT Entity
Gross Receipts NONPROFIT Entity
For the 2020 ERC, your business or nonprofit will need to show a significant decline in gross receipts beginning April 1, 2020 and ending January 1, 2021. Your company or nonprofit will be eligible for a credit during the quarter you return to 80%+ revenue levels. In the example below, this company is eligible for ERC through December 31, 2020
For the 2020 ERC, your business or nonprofit will need to show a significant decline in gross receipts beginning April 1, 2020 and ending October 1, 2020. Your company or nonprofit will be eligible for a credit during the quarter you return to 80%+ revenue levels. In the example below, this company is eligible for ERC through September 30, 2020.
Kruggel Lawton CPAs have experienced accounting professionals standing by to help you through this process. We are open to address all of your questions related to PPP and ERC. Contact us if you have more questions.