Part of successfully running a business is planning for the future. However, you can’t plan for everything: No one saw the COVID-19 pandemic coming. Fortunately, the ERTC helped many businesses account for their revenue losses.
While the ERTC addresses past revenue loss, you can also use it to plan for the future. The ERTC and succession planning are vital tools that can secure the future of your business.
What Is the ERTC?
The Employee Retention Tax Credit (ERTC) is a relief measure that the government took in 2020 to help businesses suffering from COVID-19. It’s a refundable tax credit that rewards businesses for keeping employees on their payroll.
Qualifying businesses collect up to 50% of employee wages at $10,000 per employee for 2020, and 70% of employee wages at $10,000 per employee per quarter for 2021.
To qualify, your business must have either experienced a suspension of regular operations due to a government order or a significant decline in gross receipts.
Qualifications for gross receipts include:
- A 50% loss in 2020 when comparing quarters to corresponding 2019 quarters
- A 20% loss in 2021 when comparing quarters to corresponding 2019 quarters
Qualifications for suspension of operations include:
- Altered hours
- Change in business model
- Social distancing requirements
- Slow supply chain
What Is Succession Planning?
You might feel like everyone at your business is filling their role perfectly, but it can’t stay that way forever. People retire, quit, or otherwise cannot fill their roles anymore. The succession planning processes ensure you prepare for this.
Business owners should not underestimate the importance of succession planning; it is essential to secure the future of the company. Frantically filling vital positions when they unexpectedly become vacant is ineffective, and often doesn’t benefit the employee or business.
To start succession planning, first identify all the key roles at your company. Which leadership positions do you rely on most? Make a list.
Then, consider your current pool of talent. Who are some of the newer employees who haven’t worked their way up the ladder yet? What are their skill sets? Do they have the potential to fill a future leadership role?
From there, make a training and transition plan. These employees must receive the training they need ahead of time to guarantee their success in that role. You’ll need to review and amend your succession plan over time, but the sooner you start, the better.
How You Can Use the ERTC and Succession Planning to Secure Your Business’ Future
An effective succession plan gives you and your employees peace of mind about the future of your business. The ERTC and succession planning are excellent tools for securing your future.
The ERTC provides the funding you need to keep employee wages consistent and to retain employees with potential. Succession planning ensures those employees know you value them and their professional goals. This promotes a healthy work environment.
Using ERTC funds and succession planning, you can preserve intellectual property and institutional knowledge. These are priceless assets to your business. By training your newer talent to take on this knowledge through career development, you know that won’t be lost.
Finally, retaining employees and planning for the future keeps an open line of communication between employees and the leadership team.
Take Control of Your Future and File for the ERTC
Take control of your business’s future and contact Dayes Law Firm to file for the ERTC. Time is ticking — you can only file up until three years after you filed your original taxes for 2020 and 2021.
At Dayes Law Firm, we have assisted businesses in filing over $100 million in ERTC claims. Contact us at 800-503-2000 for your free consultation about the ERTC and succession planning for your business.