Does the ERTC Help with Cost Cutting and Employee Retention?

October 18, 2023
Dayes Law Firm

When you’re a business owner, you must be resilient. The COVID-19 pandemic proved this, as many businesses faced extreme revenue loss. The Employee Retention Tax Credit (ERTC) provided some relief by refunding qualifying employers a portion of employee wages for keeping employees on their payroll.

Now that your business is operating as usual, you can still benefit from the ERTC. You can use the ERTC for employee retention. Yes, you can use your benefits from retaining employees to continue retaining employees. 

You can claim the Employee Retention Tax Credit with the help of our professional tax attorneys at Dayes Law Firm. With extensive experience in ERTC recovery, we’ll help you maximize your benefits to their fullest potential. 

What Is the ERTC?

To help struggling businesses during the pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act introduced the ERTC. The ERTC is a refundable tax credit that allows employers to earn back some of the cost of their employees’ wages.

When the tax credit first went into effect, it lasted through 2020 and only applied to businesses that hadn’t already taken advantage of Paycheck Protection Program (PPP) loans. 

However, in 2021, the Consolidated Appropriations Act extended the ERTC through 2021. It also changed qualifications to allow more businesses to claim the credit.

The eligibility requirements for the ERTC involve two tests: the gross receipts test and the suspension of operations test. The gross receipts test requires you to have seen a 50% loss in gross receipts in 2020 and a 20% loss in 2021. Note that the Infrastructure Investment and Jobs Act cut the ERTC short, only allowing businesses to claim the first three quarters of 2021.

Another way to earn eligibility for the ERTC is a full or partial suspension of operations in response to a government mandate. Note that your suspension of operations had to be a direct result of a government order, not following Centers for Disease Control (CDC) guidelines. 

The Importance of Cost Cutting and Employee Retention

Your obstacles as a business owner didn’t end with the lockdowns. You’re still looking for solutions to help with cost-cutting and employee retention. Cost cutting involves a careful analysis of your budget and consideration regarding where you can cut or redistribute funds. This goes hand in hand with employee retention.

How you spend your budget impacts your employees. By keeping an open line of communication with them and prioritizing their satisfaction, you strengthen your team. The more turnover your business has, the more resources you need to use to hire and train new people continuously. 

How the ERTC Helps with Cost Cutting and Employee Retention

So, how can you use the ERTC for employee retention? 

When you claim the ERTC, you will collect your refund six months to a year after your claim is approved. This gives you plenty of time to plan how to use your extra funds. Recovering from the financial loss of COVID-19 is a priority, but once you’re on steady ground, how do you use your refund?

Your ERTC refund allows you to continue paying employees, providing them with healthcare, and even include benefits like professional development. Investing this money back into your employees keeps retention high and costs low. 

You can also use your refund to invest in more efficient production or marketing tools. This will save you money over time. 

News on Employee Retention Program

In September, the IRS announced “an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program” as a result of increased fraud concerns. IRS Commissioner Danny Werfel noted in the announcement, “The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” and urged that when it comes to claiming the credit, “businesses should seek out a trusted tax professional who actually understands the complex ERC rules.”

Use the ERTC for Your Business with Skilled ERTC Lawyers who Follow ERC Rules

Using the ERTC for employee retention is just the beginning. Retroactively file the ERTC with the help of our team at Dayes Law Firm. We guide you through the complex claims process while you reap the benefits. Call 866-567-4510 today for a free consultation