COVID-19 Update from Bridge West: The Employee Retention Credit (ERC) May Be Available for Your Business

Professionals calculating their taxes

The Employee Retention Credit (ERC) may be available for your business.  The eligibility requirement for 2021 has been relaxed significantly.  If you have employees, and your business sales for fourth-quarter 2020 were down by more than 20% compared to fourth quarter 2019, your business would be eligible for the credit in the first quarter of 2021.  The amount available is up to $7,000 per employee for the first quarter of 2021.

If your sales for the first quarter of 2021 are down by more than 20% compared to the first quarter of 2019, then the ERC may be available for the first quarter of 2021.  If you meet these qualifications, your business will then qualify for the ERC for the second quarter of 2021.  If you had 10 employees averaging $10,000 per quarter for both the first quarter and second quarter of 2021, your business would receive a credit of up to $70,000 for the first quarter of 2021 and an additional $70,000 for the second quarter for a total of $140,000.

Information Needed for First Quarter 2021 ERC

The following pieces of information are needed for the first quarter of 2021 ERC:

  1. Sales information for fourth-quarter 2020 compared to fourth quarter 2019 to confirm more than 20% decrease.
  2. Fourth-quarter Form 941.
  3. Fourth-quarter 2020 payroll detail by employee.
  4. Projected first quarter 2021 payroll detail by employee.
  5. List of any employees that are relatives of a more than 50% owner.
  6. Form W-3 (the cover sheet to the W-2s) from 2019.

Additional Information

The Consolidated Appropriations Act changes key provisions of the ERC and expands the applicability of the credit. These changes affect eligibility for both 2020 and 2021.

Who to Contact

If you think you may qualify for the credit, please contact a member of the Bridge West Leadership Team or schedule a complimentary consultation.