E.R.T.C. - What it Means to Me

The Employee Retention Tax Credit
This is a refundable PAYROLL tax credit that incentivized the retention of employees during the time a business was affected by government (federal or state) ordered shutdowns due to the coronavirus.

PPP and ERTC
If you used your PPP primarily for payroll, the ERTC calculations cannot use those wages covered by PPP in determining how much credit you will receive from the ERTC.

Eligibility lowered
It used to be that you could only choose the PPP or ERTC, now you will be allowed to do both. It used be that you could only apply for the ERTC if you had a certain amount of losses AND your business had to be affected by a government ordered shutdown, now it’s OR. It means that if your state ordered you to capacity limits, or forced you to only do takeout, or took away your bar seating, you are eligible for this credit.

Maximize with PPP
There is a way that you can take advantage of the PPP and ERTC to its fullest potential. Use only the minimum amount necessary of the PPP on payroll to qualify for Forgiveness and use the rest on the other qualifying expenses, that way you can use the rest of the wages in the calculation of the ERTC (remember, you cannot double-dip).

2nd PPP and Extended ERTC 2021
The maximization will be necessary this year (2021) if you applied and received the 2nd PPP and want to take full advantage of the ERTC, since it’s seeming likely that the ERTC will be extended until the rest of the year (currently only the first TWO quarters of 2021 will qualify).

How do I get the money?
You can receive it in a couple of ways. Your accountant can file a form and receive the money as a refund OR you can apply the credit to future 941’s.

How much money?
It depends entirely on how many employees you have and how much PPP you took out and how well you maximize both calculations. But essentially it’s about 5,000 per employee in 2020 and 7,000 per employee in 2021.

Good luck, amigos!