What Can ERTC Funds Be Used for in My Business?

Did your business suffer disruptions or major losses during the COVID-19 pandemic? You may be eligible to collect ERC/ERTC funds retroactively if you haven’t applied for this tax benefit yet. So how does ERTC work, who is eligible, and what can you do with these funds? 

What Is the ERTC?

ERTC (Employee Retention Tax Credit) is a tax benefit that came into effect during the COVID-19 pandemic. Basically, it’s a tax credit that rewards employers for having kept employees on payroll during the pandemic. Qualifying businesses may collect as much as $26,000 per employee throughout 2020-2021. 

The IRS examines ERC/ERTC qualifications for every applicable quarter. Eligibility requirements are somewhat complex, but your company could potentially claim ERTC if your business experienced a significant decline in gross receipts (20% or more in 2021, 50% or more in 2020) during the pandemic and if you employ under 500 workers (100 in 2020), including both part-time and full-time employees.

You may qualify whether you’re a startup, small business, LLC, corporation, or nonprofit. Keep in mind that any wages included in PPP loan forgiveness would be ineligible for ERTC. 

What Your Business Can Do With ERTC Funds

Claiming ERTC funds can give your company a significant chunk of cash. How should you use it? Depending on the sum you’d be able to claim, you may consider several options. 

1. Invest in Your Employees

With the current inflation rates and soaring costs of living, your employees will appreciate any cash bonus, addition to their benefits, or even paid vacation time. Your generosity will show your employees that you value them, help keep your workers motivated, and reduce the rate of quiet quitting. You’ll also mark yourself as a desirable employer at a time when many companies practice cutbacks. 

2. Make Major Purchases

Do you have a vision of investing in innovative technology or purchasing real estate for your business? ERTC funds can give you an opportunity to make major purchases and possibly gain an edge over your competition without restricting your company’s cash flow too much. As a bonus, purchasing new equipment for your company may also be tax deductible. You could even use your ERTC money to acquire a related business and enlarge your market slice. 

3. Tackle Debt

Many businesses still carry major debt as a legacy of the pandemic. If this is true for your company, ERTC funds can go toward eliminating some of your debt and help your business turn a fresh leaf. 

4. Expand Your Products or Services

Have you always dreamed of expanding your product line, launching a new service, or breaking into an overseas market? An ERTC cash boost may enable you to do that. You can use the money to train employees, invest in research and development, and pour more resources into marketing. 

5. Save Cash for a Rainy Day

You don’t necessarily have to spend all your ERTC funds right away. You could put the money aside in an emergency fund account or place it in safe investments that you can cash out if your business hits a crisis. These cash reserves can help your business handle financial hurdles or market shifts. 

Dayes Law Firm PC: Helping Businesses Claim ERTC Benefits

While you can still apply for the ERTC benefit retroactively, the time for claiming ERTC funds is running out fast. The knowledgeable tax lawyers of Dayes Law Firm PC can help your business collect available tax benefits. We’ll check whether you meet eligibility requirements and handle your application from A to Z.

Not sure whether your business qualifies for ERTC? Call 800-503-2000 for a free consultation today.