Does the ERTC Help Auto Repair Shops and Garages?
When the COVID-19 pandemic turned the economy on its head, nearly every industry felt its impact. While businesses like retail stores, restaurants, hair salons, hotels, and events captured the news headlines, many businesses suffered.
Thanks to the Employee Retention Tax Credit (ERTC), businesses could claim up to $26,000 per employee if certain qualifications are met. This tax credit is available to all industries, including auto repair shops and garages.
Here is an outline of various ways that the ERTC can help auto repair shops and garages gain an influx of needed funds from the IRS tax credit.
Determining ERTC for Car Repair Shops
If you’re unfamiliar with the ERTC, here’s a quick overview. Businesses that faced a significant decline in revenue (at least 50% in 2020 and 20% in 2021 compared to the same quarter in 2019) or were subject to a full or partial suspension of operations can claim the credit.
Whether you are eligible for the Employee Retention Tax Credit ERTC is determined on a quarterly basis, and several rules could affect eligibility, including the size of your business (companies with more than 500 employees have more restrictions), whether you employ family members, whether you received PPP funds and used them salaries, and more.
Due to the complexity of the rules and the several changes that have happened since the initial passage of the CARES (Coronavirus Aid, Relief and Economic Security) Act, it’s highly recommended that you contact an experienced tax professional for help filing for the ERTC.
How ERTC Funds Can Help Auto Repair Shops and Garages
If your auto repair shop or garage can qualify for the Employee Retention Tax Credit ERTC, you can receive a significant financial windfall. You can choose to do whatever you’d like with these extra funds, and here are four ideas that can ultimately shore up your business to weather future economic disasters.
1. Reward Your Employees
The pandemic was a stressful time for almost everyone, and many families experienced extreme financial hardship. If you have the capability, you might want to consider using ERTC funds to provide wage increases, bonuses, or more robust benefits packages.
In turn, your employees will likely be grateful for your generosity and reward you with loyalty if your business falls on tough times.
2. Invest in New Equipment or Software
If you’ve been staring at a leaking, rusted machine in the corner or you’ve been thinking about automating certain processes, the funds provided by the ERTC can give you some financial flexibility and free up funds to reinvest in your business.
3. Pay Off Debt
If you struggled to keep employees on payroll due to the shutdown or a decrease in demand for your services (after all, people were driving a lot less during the pandemic), you might have accumulated debt just to keep the lights on.
Carrying debt can be expensive, especially if you’re paying high interest rates. Therefore, using ERTC funds to reduce or eliminate your company’s debt can be a smart financial move.
4. Create Cash Reserves
No one expected a worldwide shutdown in 2020. Now that the unexpected has actually happened, it should put businesses on high alert for other seemingly unlikely events. Operating a business is expensive, and if you can have some cash reserves to keep you afloat for several months, it can buy you peace of mind.
Contact an Experienced ERTC Professional at Dayes Law Firm for Help Claiming Your Tax Credit
Depending on the size of your business and the effect that the pandemic had on your revenue or operations, you could be eligible for a significant credit as part of the Employee Retention Credit. Dayes Law Firm has helped businesses across a variety of industries claim more than $250 million in ERTC credits, and we can help you too. Contact us at 800-503-2000 for a free consultation.
