The Benefits of the Employee Retention Credit
CO-CREATE | CO-DEVELOP | DELIVER
Jen: This is the PKF Texas - Entrepreneur’s Playbook®. I'm Jen Lemanski, and I'm back again with Roland Robb, a member of our business advisory team. Roland, welcome back to the Playbook.
Roland: Hi, good to be back.
Jen: So, we were talking a little bit about the Employee Retention Credit last time, but what we didn't get the chance to get to were what are the benefits that a company could see by applying and receiving this credit?
Roland: As we mentioned before, the ERC, it has one name, but there are kind of two different rules for 2020 and 2021. The rules changed pretty significantly. For 2020, the maximum benefit to an employer is up to $5,000 per employee for the year of 2020. In 2021, the eligibility was relaxed, and the benefits were also increased. So, instead of looking at it on a per year basis, 2021, you look at it on a per quarter basis. And the benefit per quarter is potentially up to $7,000 per employee. So, rather than $5,000 per year for 2020, the benefit could be up to $28,000 per year in 2021, if you qualify for all four quarters of 2021.
Jen: Now, are there any caps to that with number of employees or something like that?
Roland: With the 2020 version of the credit, there are some eligibility thresholds that you need to meet. You need to have either had your business shut down by government order or significantly decreased by government order. And, or you need to have had a quarter where you had a 50% decrease in gross revenues compared to that same comparative quarter in the baseline year of 2019. For 2021, the qualifications are relaxed a bit, and you need to have revenue drops of only 20% compared to the same comparative quarter in 2019. There also is a second look back window, but we can get into that; that's a bit too much into the weeds.
Jen: Yeah. So, they should call you to get into those weeds?
Roland: Yes. We'll be happy to have that conversation.
Jen: Alright. Perfect. Well, Roland, we'll get you back to talk a little bit more about the ERC in another video. Sound good?
Roland: All right. I'll be here.
Jen: Perfect. Thanks. This has been another thought leadership production brought to you by PKF Texas – The Entrepreneurs Playbook®. To learn more about this topic, please visit www.PKFTexas.com. Tune in next week for another chapter.