Pandemic Aid For Startups Lasts Through 2021 – ERC Recovery Startup Business
Startups can take advantage of a major tax credit through the end of 2021, but it may go away after that.
We are talking about the Employee Retention Credit (ERC) first introduced as part of the CARES Act, which took effect in March 2020 to mitigate the economic impact of the Covid-19 pandemic. Designed to encourage employers to keep staff on their payroll, the ERC tax credit gives employers a refundable tax credit for qualifying wages.
This tax credit was extended as part of the American Rescue Plan Act of 2021, but those provisions expire at the end of the year. There could be significant tax savings for startups that take advantage of this tax credit – provided they make the right moves while there’s still time.
Explaining the ERC for recovery startup businesses
There are two important questions: who qualifies for ERC tax credits and how much can they claim?
To qualify originally, a business must have had their operations fully or partially suspended due to a government shut-down order or experienced at least a 50% decline in gross receipts. The original version of ERC remains in place.
However a new provision was added for recovery startup businesses that opened after Feb 2020 and have gross receipts under $1 million.
For the third and fourth quarters of 2021, the amount of ERC tax credits for recovery startup businesses equal 70% of qualified wages up to $10,000 per employee. The maximum credit for each quarter is $50,000.
Claim ERC Credits On Your 2021 Taxes
With little time left to claim ERC tax credits, rely on startup tax strategists to maximize your savings. Experts can work within tight deadlines and claim as many credits as possible without raising red flags with the IRS. Proseer can help your startup leverage ERC tax credits while they last – one of many ways we can fine-tune your tax strategy and bolster your business advantage. Contact us about slashing your 2021 tax bill.
