What Is Employee Retention Tax Credit And How Do Employee Retention Tax Credits Work

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The Employee Retention Tax Credit was introduced in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as an incentive to employers to keep employees on the payroll even as they might have to forego health insurance benefits due to the financial fallout of COVID-19.

This article will explore the Employee Retention Tax Credit and how it can help your business maintain healthy cash flow while still retaining key personnel.

Following the enactment of the American Rescue Plan Act, most employers, including colleges, universities, hospitals and 501(c) organizations can qualify for the credit.

Previously, the Consolidated Appropriations Act expanded qualifications to include businesses who took a PPP loan, including borrowers from the initial round of PPP who originally were ineligible to claim the tax credit.

Qualification is determined by one of two factors for eligible employers — and one of these factors must apply in the calendar quarter the employer wishes to utilize the credit:Trade or business was fully or partially suspended or had to reduce business hours due to a government order.

The credit applies only for the portion of the quarter the business is suspended, not the entire quarter.Employer has a significant decline in gross receipts.

Click here to learn more about the Employee Retention Tax Credit and if you think business financing or loans is what your business needs, you are at the right place. Click https://thepeoplesdepot.com/blog/business-loans  to learn how to get started.