Donna Genie (pypaccounting.com) explains the Employee Retention Credit (ERC) and how small studios can claim retroactive credits for 2020 and larger credits for the first half of 2021. Key rule points: 2020 credit = 50% of wages up to $5,000 per employee (annual); 2021 credit = 70% of wages on the first $10,000 per employee per quarter (available through June 30, 2021). She presents a worked example (Jane and three employees) showing an $18,000 retroactive credit for 2020 and a combined $40,400 credit across 2020–H1 2021 for the example company, and asks viewers to gather payroll, 941s, W‑2s and quarterly sales for 2019–2020 to prepare claims.
Questions this video answers
50% of wages, up to $5,000 per employee for the year (2020).
70% of wages on the first $10,000 per employee per quarter (2021, through June 30, 2021).
June 30, 2021.
$18,000 retroactive credit for 2020.
$40,400.
Chapters
What if I told you employees are on sale right now and it's 70% off? So maybe a $10 employee would only cost you $3 an hour. What would you do with that news? Would you go out and hire some folks to help you? Would you hire a social media intern to help you get your marketing program off the ground and help boost your sales? Well, now is the time most studios will qualify for this. I'm Donna Bordeaux, and I am with pypaccounting.com we've got news of the latest employee retention tax credit. The employee retention credit is meant to help through Covid, and you need to qualify with two ways. I've got a whole video that describes the whole process, so I'm going to go rather quickly here. But for 2020, it's retroactive. Before, they said you couldn't use it if you had the ppp. So nobody really even paid attention to this because most people were utilizing the PPP program. But now that you can do both, there may be some retroactive money just waiting for you. In 2020, it was 50% of wages, up to $5,000 per employee per year. That's a pretty substantial amount. If you had four employees, you could have $20,000 waiting for you. If you pay them at least $10,000 each, that's a pretty good deal. Everybody could find something to do with 20 grand. In 2021, that program got even better. We now get 70% of the first $10,000 in wages, but instead of being per year, it's now per quarter. So that means you could get 7,000 in the first quarter and 7,000 in the second quarter. $14,000 for each employee that you pay, up to $10,000 a quarter. Pretty good deal. So we'll get down to the numbers in a minute, but let me take you over and let's show you a little example of how great this thing can be. I've got an example here that deals with 2020 on the top, 2021 on the bottom. Now, I've got Jane, the owner of the business, and she has three employees working with her. So I've got their quarterly wages. We'll break that down. That would come out of the payroll. Remember back in 2020, it was $5,000 maximum per employee, so you had to pay them 10,000. You got a 50% credit or $5,000. So Jane had payroll of about $76,000 for the last three quarters of the year. She is eligible to take an $18,000 retroactive credit for 2020. Now, that's pretty awesome. Now in 2021, it's going to get even better. We've got an employee. Jane is the owner. She's taking home 10,000 to $12,000 per quarter. In her case, she'll get a $7,000 credit maximum right there in the first quarter. So in this case, Karen was receiving $4,000 for the first quarter. That means she's going to get 70% of that in the first quarter as her credit or $2,800 in quarter two. She's going to get it again. And Bob, same factor, 70%. Mary. Now she's going to exceed the $10,000 in that second quarter. So the second quarter is limited a little bit. But in the first two quarters, the company is paying out $49,000 in payroll. They are going to get a credit of $22,400 in quarters one and two. Now, if this program is extended, wow, that could be awesome too. But it's not. Right now, it just runs through June 30th of 2021. So this example company, again, a very small payroll is due back $40,400, all because of the ERC, the employee retention credit. That is so awesome. Think about what you would do in this situation and how you could utilize employees to help you and to make your business grow. I know we've all been through some tough times and you've probably worked your tail off as the owner or the manager of of your studio. Wouldn't it be great to get a little bit of a breather? Sometimes just some fresh blood can help. So look at this credit and take a look at what a 70% discount on an employee would mean for you. Now, we have a bunch of information coming. There's still way more details coming out on how you actually get this money, but we are going to be rolling out some solutions to help Studios. If you are a VIP client with us right now, we're already working on this in the background. There's nothing that you need to do. We are getting you lined up to get this money back to you asap and we'll be in touch soon with the details of how much you are due back and what your credit situation looks like. If you're not currently working with us, we are also going to have some programs available to you so that we can help you retrieve this money. Now, in the meantime, to get ready for this, you're going to need to know your quarterly sales for all of 20, 19 and 20, as well as have your payroll records ready by the quarter and your 941s and W2s. So start the gathering process. Let us take a look and we'll be in touch with you probably early next week with some new ways that we can help you go back and get this money. We're waiting on some final details on how the procedures will work to get this back, but we should have some further information by next week. So I've got a form on our website where you can fill out if you are interested in getting those details as soon as they are available to help get this money back for you and to help you take advantage of it in 2021. So hop out to pyopaccounting.com erc for employee retention credit. I hope to talk with you soon and I hope we can get some money rolling for you and help your studio survive and thrive.
