If your business suffered financial loss during the pandemic, take heart. There are a number of programs that can help your company recover. Here are some benefits that might be able to help your business.
1. The Employee Retention Tax Credit
This employee retention credit was created to motivate employers to keep their employees on the payroll during the coronavirus pandemic. If your company paid qualified wages to your employees, your company could get a substantial tax credit depending on the number of employees you had on your payroll during the pandemic.
Required Qualifications
Your company has to have been in the private sector and have been in business during the year 2020 to qualify. Your business also should have met one of the following requirements:
• Your business was forced to shut down either partially or completely as ordered by the government.
• Your company experienced a significant loss during the pandemic.
Meeting either of these means you could be eligible for these tax credits. No matter what kind of business you have, if you were negatively impacted by the pandemic, you can likely qualify for this credit.
Those Who Don't Qualify
If your business was considered essential or if you were able to continue your operations despite your doors being closed, you may not qualify for this tax credit.
What the Benefits Include
Your company can claim credit for up to half of all qualified wages that you paid, up to $7,000 per employee per quarter, or up to $28,000 for each person working for your business during the calendar year of 2021.
Keep in mind that these credits can be claimed retroactively for up to three years from the time the program ends.
2. Tax Credits for Paid Leave
If your privately-owned company had less than 500 employees during the pandemic, and you provided paid leave to your employees, you can take a tax credit. This credit allows you to be reimbursed up to 100 percent of the leave wages you voluntarily paid to your employees.
Employees Who Qualify
The employees who qualify for this credit include both full-time and part-time workers. Temporary staff and day laborers also qualify. Independent contractors, on the other hand, don't qualify for this tax credit.
Other Qualification Requirements
Your employees qualify for this leave if they meet any of the following qualifications:
• They were ordered to be quarantined by a government entity.
• They were advised to be quarantined by a health care provider.
• They were experiencing COVID-19 symptoms and sought medical help.
• They were caring for a person who was quarantined.
• They were caring for their children because the schools were closed.
3. PPP Loan Forgiveness
The Paycheck Protection Program was created to help suffering businesses by providing loans to help with payrolls for two and a half months during the pandemic. These loans can be forgiven if your business meets certain qualifications.
If you're interested in applying for loan forgiveness, contact your PPP lender. Depending on the amount of the loan, you may need to provide documentation showing you suffered losses in revenues during the pandemic. You must also demonstrate that you spent at least 60% of the loan funds to cover payroll costs. The other 40% can go for other business expenses.
When To Apply
You'll need to apply for loan forgiveness before the loan becomes mature, typically two to five years after taking out the loan.
If You're Self-Employed
If you're self-employed or worked as an independent contractor, you may also be able to get up to 75% of your PPP loan forgiven.
The pandemic was a tough time for many small businesses. Having their doors shut caused the owners of small companies to suffer devastating losses. Things are looking brighter, however, and thanks to the help of a few government programs, small business owners can get back on their feet and begin operating their establishments at a profit once more.