Last Call for Q1-2021 Employee Retention Tax Credit!

Have you experienced at least a 20% decline in revenue for Q1-2021 when compared with Q1-2019?  Or, is your business still subject to a government imposed limitation?  Do you need help to determine whether you qualify?

If so, please contact us before March 31^st to review your eligibility for the Employee Retention Tax Credit and to ensure your Q1 payroll is set up to maximize the credit.  There are tremendous benefits under this program and it is compatible with PPP borrowing and other grant programs such as the MA Sector-Specific Grant Program.

Here is a typical scenario:

ABC Company is a supplier to the hospitality industry.  ABC Company immediately began to feel the effects of the government-imposed shutdown of restaurants, hotels, inns and other service businesses beginning back in March 2020.  Since then, ABC received PPP in 2020, PPP round 2 in 2021 and also received the MA Sector Specific Grant.   Prior to the pandemic, ABC employed 25 people and now employs 15.  Of the 15 employees earning wages in 2020, 9 of them earned approximately $35,000 per year, and 6 earned approximately $65,000 per year.  Since all 15 employees earned in excess of the $10,000 threshold of qualified wages, the Company was entitled to a payroll tax credit of $75,000 (50% of $150,000 (15 employees X $10,000 per employee in qualified wages).

Now, as of March 2021, the Company’s operations have improved, but are still running at about 70% of what it was pre-Covid.  Since the Company’s revenue decline is at least 20%, the Company continues to be eligible for the quarterly ERTC.  During Q1, 9 of the employees earned $8,000 in gross wages for Q1 and 4 earned $15,000.  The 2 owners had no payroll in Q1 as they were trying to conserve cash.  Without any further action, the Company would be entitled to a maximum ERTC of $78,400 (70% of $112,000 in qualified wages).  However, the owner called ADC prior to March 31 and asked us to maximize the credit for them.  Based on our suggestions, the Company’s qualified wages were increased to the cap of $150,000, resulting in a credit of $105,000, an increase of $26,600!

As you can see, we assisted our client in generating $180,000 in payroll tax credits through Q1 2021 and if the Company continues to qualify, would be eligible for up to $210,000 more through December 31, assuming consistent headcount and wages.