How the ERTC Can Propel Business Expansion

August 18, 2023
Dayes Law Firm

Did you know the ERTC expands businesses? Eligible employers can take advantage of the Employee Retention Tax Credit (ERTC) to reclaim a portion of wages paid on their tax returns for qualifying quarters of 2020 and 2021. But how can the ERTC help you grow your business?

How Much Can You Claim Through the ERTC?

If you had to shut down business during the qualifying period of 2020 or 2021, or if you stayed open but experienced a significant decrease in revenue compared to the same quarter in 2019, you could qualify for a tax credit to reimburse you for wages paid. Rules may vary for lost revenue for recovery start-up businesses, which are businesses that opened after February 15, 2020.

Claiming the ERTC could net you up to $5,000 for each qualifying employee throughout 2020, and up to $7,000 per employee per quarter for the first three quarters of 2021. That’s up to $26,000 per qualifying employee if you’re able to claim the ERTC for the entire period of eligibility.

How You Can Use Your ERTC Money to Expand Your Business

If the ERTC expands businesses, what do most business owners use their tax credit for? You can attribute those extra funds to any of your business operations or investments, including:

1. Tech and Equipment Upgrades

Equipment wears out over time. When’s the last time you bought new computers for the office or replaced the equipment in your restaurant kitchen? Funding from the ERTC can help you get those upgrades and improve productivity.

2. New Product Launch

Have you had an idea in your head for a new product for your brand? You can use the ERTC for a quick cash injection to cover new equipment purchases, initial run costs, marketing expenses, packaging design, and other product launch expenses. You may also need to hire new employees to work on production lines and marketing campaigns for the new product.

3. Location Upgrades

Have you been considering an expansion for your physical location? Whether you want to add onto your existing building or move offices to a larger space, extra funds from the ERTC can help you afford the costs of constructing or purchasing a larger office space, plus the costs of moving and transferring your utilities and services.

4. Business Acquisition

Acquiring another business in a related industry or a direct competitor can improve your company’s profitability in your target market and increase your market share. Buying out a local competitor can improve your prospects for hiring experienced employees in your industry. If you purchase a business in a related industry, you can incorporate their processes into your operations to streamline time and cost.

5. Debts

Every business has debts, whether it’s paying off an equipment purchase or expenses to maintain fleet vehicles. While some debt can be beneficial for your debt-to-equity ratio, you could use the ERTC to reduce your debts and pay down more on the principal.

6. Bonuses and Benefits

Your business wouldn’t be where it is now without the hard work of your employees. You can show your appreciation by using part of your ERTC funds to offer a special bonus or develop a robust benefits program to include additional benefits like childcare benefits, fitness program benefits, additional paid vacation days, and other valuable resources for your employees.

Learn More About Claiming the ERTC to Propel Business Growth

The ERTC expands businesses. For more information about how you can use the ERTC to your advantage to grow your business, contact us today at Dayes Law Firm. Call us today at (800) 503-2000 or contact us online to schedule a consultation.