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The Employee Retention Credit (ERC) has already helped tens of thousands of business owners get the refund they deserve. This payroll tax refund for 2020 and the first three quarters of 2021 for eligible small and medium-sized businesses is still available as of 2023, but the deadline to apply for all six quarters is scheduled for April 2024.
Congress created the ERC program to help eligible businesses that kept employees on payroll during the pandemic, but it ended in 2021. The good news is the IRS will still allow your business to apply for the 2020 and 2021 tax seasons.
When people talk about the 2023 ERC, it’s not in reference to a qualifying year, but rather the year some eligible businesses are receiving their refund from the U.S. Treasury. Below, we’ll discuss how the ERC can impact your business in 2023 and beyond. What if my business received PPP loans?
The Paycheck Protection Plan (PPP) loans were originally part of the CARES Act in 2020 (just like the ERC). These loans were eligible for loan forgiveness through the Small Business Administration (SBA). These PPP loans are no longer available, but your CPA may have told you that if your business received a PPP loan, it could not apply for the ERC. This is false. While it’s true you can’t “double dip” (i.e. you can’t claim the same payroll expenses for the ERC that you used to get PPP loans),your company can still apply for the ERC.
The ERC vs. the PPP
The key difference between the ERC and the PPP is that the ERC is not a loan. Another important factor is that your business can no longer get a PPP loan, but it can receive an ERC refund in 2023 if it meets eligibility requirements.
What can the ERC refund do for eligible businesses? Read on to find out.
- Expand your business
Expanding your business should be planned to avoid growing pains. Planned growth needs to include a decent budget to cover marketing costs, rent, and more. With the ERC refund, eligible businesses may have the cash flow to consider investing in options such as:
- Hiring more employees
- Business equipment
- New technology
- Opening new locations
Expanding your business can help open new avenues for revenue growth while providing your business and team with stability for the future.
- Invest in your employees
A 2020 Deloitte survey found that 34% of employees were satisfied with their organization’s investment in improving employee skills and performance. Employees serious about career path advancement will want ways to hone their skills. You can empower your employees by offering continuing education programs and learning opportunities.
This could be in the form of seminars, online courses, or even virtual training events. You can also include subject areas outside of your industry. For example, many businesses can benefit by investing in cybersecurity awareness training programs for their employees. By investing in your team, you can attract and retain the best talent.
- Grow your business’ products and services
Investing in more in-demand services and products can help widen your company’s target market while increasing brand awareness so your business stays top of mind. As they say, you need to spend money to make money. However, spend it smartly by doing your homework and improving components of your business that will lead to beneficial outcomes in the future.
Eligible businesses can use their ERC refund to invest in new projects as well. One strategy involves streamlining your operations by updating and matching your website to your customer service policies. If your website is already polished, you can reverse this strategy and explore customer reviews to see if your policies and procedures can provide a better customer experience.
There’s still time to apply for the ERC
If you’ve been struggling to keep your business afloat, there’s still time to apply for the ERC. Our team will work with you to collect the necessary documents so you can submit your business’ ERC application before the 2024 deadline.
While not all companies are eligible, it’s worth applying as many businesses have already received tens of thousands of dollars back that they are now using to grow their business, invest in their employees, and more.
By filling out our intake form, you can find out if your business may be eligible for a significant refund. No matter what industry your business is in, everyone can benefit from the ERC if they are eligible. With the ERC, 2023 can be the year your business achieves new milestones and growth.