Fully Refundable Tax Credit Information that May Apply to Your Startup
Fully Refundable ERTC Tax Credit Information that May Apply to Your Startup
By Jeff Haskett, CEO, and Co-Founder of Clarus R+D
ERTC (Employee Retention Tax Credit) is a refundable tax credit that encourages businesses to keep employees on their payroll. Recently, ERTC was extended and expanded with a Recovery Startup provision, and companies may now retroactively claim the ERTC in addition to the Paycheck Protection Program loan.
Companies that received PPP loans may now also claim the ERTC. Additionally, nearly every aspect of the credit has been liberalized and extended through 2021.
Expanded Opportunity to Keep Employees and Offset Expenses
Suppose a business was affected by a government-ordered shutdown or had at least a 50 percent decline in quarterly gross receipts. In that case, the expanded ERTC creates a compelling look-back opportunity for 2020.
A business can now quality if:
- they had a 20 percent (reduced from the 2020 50 percent requirement) decline in gross receipts in 2021 compared to the same quarter in 2019, or
- they began a new trade or business (which can be an entirely new company or a new trade, product, or service offering within an existing business) after February 15, 2020, and have average annual gross receipts of no more than $1 MM for 2018 to 2020
ERTC is worth up to $5,000 per employee in 2020 and now up to $7,000 per employee per quarter in 2021. Under the recovery startup provision, small businesses can claim up to $100,000 in Q3/Q4 of 2021 based on 70 percent of qualified wages capped at $10,000 per employee per quarter.
The team at Clarus R+D can verify your eligibility, optimize your credit, and deliver documentation to support your claim.
Read these three brief and easy-to-follow posts to learn ERTC basics, new strategies for accessing, and suggestions on potential scenarios.
- Employee Retention Tax Credit – One-pager
- ERTC – The Basics
- ERTC Recovery Startup Provision – Info You Need
Is your business eligible?
These recent updates to ERTC could be a game-changer for your business. If you plan to start something new (or already have), you may qualify for additional funding for employee wages.
Founded in 2016, Clarus R+D simplifies the process of claiming R&D and employee retention tax credits. Founded by tax and technology experts, Clarus builds cloud-based software to deliver access, compliance, and clarity for federal and state programs. With over 1,000 customers, Clarus R+D is headquartered in Columbus, Ohio. For more information, visit clarusrd.com.
NOTE: Rev1 Ventures is not a tax advisor and isn’t offering tax advice. We recommend that entrepreneurs and startup companies always consult their tax advisors about ERTC and any tax matters.