Over the course of the Covid-19 pandemic, many businesses struggled to make ends meet. In certain sectors, the government placed restrictions on opening times or the number of customers allowed to access a service at the same time. This had a massive impact on sales and conversion for businesses.
However, it wasn’t just a case of closing the doors and watching it all blow over. In lots of cases, the business owner was still responsible for their employees and their livelihoods. Just because there wasn’t any work, didn’t mean that these people didn’t have bills to pay. For this reason, and to retain high-performing staff members, many executives opted to continue paying their employees, despite their reduced hours.
Myrtha Chang, the founder of Mathnasium, a math tutoring service, was faced with this exact problem.
“During the pandemic, the need for tutoring reduced. This was because remote learning came into play, meaning that many children had access to online tools and learning and didn’t need extra support. There were also suspensions on exams and all-around losses in jobs. The combination of these things meant that math tuition was the last thing on parents’ minds. If their child wasn’t about to sit a math exam and they had lost their job, then paying for extra lessons was out of the window.”
This dilemma caused problems within many industries. Employers were made to make the choice between letting their trained and knowledgeable staff go to support their business, with the potential that they’d need to spend more money in training up new people later or bite the bullet and continue to pay to retain their valuable employees.
Ms. Chang opted to pay her employees.
“Good math tutors are difficult to find. I knew that if I let my workforce go, I’d need to spend more time and money in recruitment and training later, which could potentially have a larger effect on the business.”
Luckily though, the IRS threw out a lifeline for businesses in this situation. For those that continued to pay their staff throughout 2020 and 2021, when the restrictions were in place, the Employee Retention Credit was introduced. This is a credit that gives business owners up to 50% of the employee’s wages that they paid out in 2020 back based on the amount they’ve paid out and up to 70% of each employee’s wage back per quarter in 2021.
The Chief Revenue Officer of ERC Benefits says that lots of people see that it’s a credit issued by the IRS and immediately assume that it will be too tough to claim and that they’ll have to jump through lots of hoops to get it. But that’s really not the case. Employers simply need to show that they have suffered a significant loss in earnings due to the restrictions placed on their business area. This can come from bank statements and previous forecasts for the years prior to the pandemic. You’d simply need to show that you’d earned at least 20% less in these years to claim. It’s also important to show that you have kept on the same staff throughout the pandemic to receive a return on their wages. If you can show that you have the equivalent workforce at the end of the pandemic as you did at the beginning (even if they aren’t the same people), that’s enough to prove eligibility.
ERC Benefits is a company created specifically to assist businesses in claiming this credit back to support their business into the future.
Employee Retention Credit is so generous that it even allows people who began business in 2020 to claim if they haven’t met their expected earnings during that year. This can be done using projections for the business turnover in the first few years.
Ms. Chang was so surprised about how much she’d been able to claim that she didn’t quite believe it at first,
“When I first got the check, I assumed it was a misprint. I didn’t believe it was real until the funds cleared in my bank. This scheme saved my business’ future.”
Although the pandemic restrictions are now lifted, you can still claim ERC right up until 2024. If you’d like more information or support in making a claim, contact ERC Benefits today at 561 680 4677 or visit the ercbenefits website