We are in the post-pandemic season, and the economy is not blooming for corporate and consumer businesses as previously predicted by industry experts. The reason for this is not difficult to discover: rising global inflation, coupled with the ongoing war in Ukraine, has impacted businesses, its supply chain and, to an extent, the quality delivery of products and services.
At the same time, business executives are faced with the complexities of increasing market and vendor pricing, employee wages, operational expenses, procurements, and customer satisfaction.
Keeping your business running is a top priority. That is why here at Expense To Profit, we provide business owners and top executives with industry trends and insider strategies to maintain operations in economic uncertainty, boost revenues and profits, and reduce expenses drastically.
The Federal Government, through the IRS and other agencies, has introduced stimulus packages to support businesses. One of them is the Employee Retention Tax Credit (ERTC). We have extensively discussed ERTC and Startups in previous posts.
This article will briefly discuss an ERTC refund and how your business can benefit from it during this inflationary season.
So, What Is ERTC Refund?
The Employee Retention Tax Credit (ERTC) is a refundable tax credit to support business owners who kept their workers on the payroll during the pandemic season of 2020 and 2021.
Why is this important? Well, during the pandemic season, as many as 60% of businesses were completely shut down. Those who chose to remain operational, providing essential products and services to Americans and kept their workers on the payroll felt the direct toll of the season.
While the tax credit was introduced by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), it is powered by the IRS.
Which Businesses Are Eligible for ERTC?
The following standards determine who may be eligible for the tax credit:
- Certain 2020 & 2021 Employee Limits. Companies with 100 or fewer full-time employees in 2020 or 500 or fewer workers in 2021.
- A partial or full suspension of operations. You can claim the credit if your business was partially or entirely shut down due to local or state regulations.
- Recovery Startups. These are businesses launched after February 2020, with annual gross receipts at most $1 million.
How Much Can I Recover through the ERTC?
According to the IRS provisions, businesses can access up to 50% of qualified wages for employees in eligible quarters throughout 2020. 70% of eligible qualified wages for Q1, Q2 & Q3 of 2021.
There are several ways your business can benefit from getting access to the ERTC. They include:
Better Access to Credit
A cash surplus is an excellent indicator of your company’s financial health. Having extra revenue from the ERTC can allow game-changing purchases with long term benefits for your business.
Your business can purchase high-quality equipment that requires less maintenance for your workplace.
Pay Off Debts
Another benefit of being eligible and getting access to the ERTC is that you can use the funds to settle debts with your financial institutions or creditors.
Your business may have incurred some debt during the pandemic or inflationary period. Settling your business loans on time will earn your business high credit scores, increasing your creditworthiness.
Higher Returns on Investments
Another evident benefit of having access to ERTC funds is that you can invest more money into new and existing products and service lines.
For instance, if you are looking to launch a new product or service, you can use the cash benefit to invest in quality packaging, product testing, social media advertising, and market penetration strategies.
Hire New Workers
Have you been meaning to increase your workforce and expand your operations? The funds from the IRS ERTC can assist in hiring and paying top talents to work for your business.
Improve Worker Morale
You can also use the cash surplus to improve your workers’ morale by offering them discounts on their health insurance, paying for their remote workstation, among other benefits.
Employees will put in their best efforts knowing their employers care about their comfort and well-being. They will feel like they are part of a successful business and will not be attempting to seek gainful employment elsewhere.
Getting access to the ERTC funds can be a complicated process that may be difficult to carry out yourself. You will need the assistance of a financial expert and expense-reduction consultant to help you successfully secure the funds.
Expense To Profit, through our Evolved Impact, can help your business access this credit and enable you to fulfil these benefits. We are also a leading expense reduction company aimed at helping small and large businesses lower their overhead costs while boosting profits.
Reach out to us today to learn about our services.