The employee retention credit under the CARES Act encourages companies to keep employees on their payroll. Determination of qualified salaries · Employee related to COVID-19. The ERTC is a refundable credit that companies can apply for on qualified salaries, including certain health insurance costs, paid to employees. However, if a self-employed person has staff on the payroll, they may qualify for the ERTC for salaries paid to other employees. A financial professional can also help you ensure that you don't apply for the same payroll for both PPP and ERTC loan forgiveness.
If you haven't yet applied for PPP loan forgiveness, consider applying for non-payroll expenses to maximize the salary you can use to apply for your ERTC. The ERTC was designed to encourage companies of all sizes to keep employees on their payroll during this difficult economic period. As such, increases or other additional compensation paid to an eligible employee during the pay period in which the employer was entitled to the ERTC were not taken into account when calculating the ERTC for that employee. Eligible employers with fewer than 500 full-time employees can also request early payment from the ERTC using IRS Form 7200.
But companies could only apply for a forgivable loan from the Paycheck Protection Program (PPP) or the ERTC on the original bill, which meant that only a few of them could use the credit. Consequently, it is important to ensure that all eligible expenses, including non-payroll costs, such as utility, rent and operating expenses, to name a few, are included in PPP loan forgiveness applications to maximize the qualified salaries available to ERTC. The CARES Act also allowed employers to file Form 7200 to request advance payment of any refundable ERTC amount.