3 Ways the ERC Will Impact Your Business in 2022 and Beyond
The Employee Retention Credit (ERC) has already helped tens of thousands of business owners get money back into their businesses where it belongs. This payroll tax refund for all of 2020 and the first three quarters of 2021 for eligible small and medium sized businesses can still be yours — if you apply.
The ERC program that was meant to assist businesses who had kept employees on their payroll despite the negative impact of COVID-19 was discontinued at the end of 2021. The good news is, the IRS will still allow you to claim your ERC refund for 2020 and 2021, and most small and medium-sized businesses are eligible.
There has been some buzz lately about the ERC for 2022. ERC 2022 is not another qualifying year (sorry!), it’s a term to discuss how you can use your payroll tax refund in 2022 to help your business thrive even during these uncertain times.
What if I Participated in the PPP?
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). The PPP loans are no longer available, but your CPA may have told you that if you received a PPP loan, you could not apply for the ERC. This is false. While it’s true you can’t “double dip” — you can’t claim the same payroll expenses for the ERC that you used to get the PPP loan — you not only can still apply for the ERC, you’re likely qualified!
ERC vs. PPP
The key difference between the two is that the Employee Retention Credit is not a loan. Another important factor is that you can no longer get a PPP loan, but you can receive your ERC refund in 2022 — if you’re qualified.
What can the ERC refund do for your business? Read on to find out.
1. Expand Your Business
Expanding your business should be planned to avoid growing pains. Planned growth, or scaling, has to include a decent budget (promotions and marketing costs money). With your ERC refund in hand, you’ll have the cash flow to consider investing options such as:
- Hiring More Employees
- Business Equipment
- New Technology
- Opening New Locations
Expanding your business can help open new avenues for revenue growth and offer stability for your business and your team.
2. Invest in Your Current Team
A 2020 Deloitte survey found that just 34% of employees were satisfied with their organization’s investment in improving employee skills and performance. People who are serious about career path advancement will want ways to hone their skills. Empower your employees by offering to up their knowledge game through continuous education programs and opportunities for learning.
This could be in the form of seminars, online courses, or even virtual training events. Don’t be afraid to 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 significantly improve their job performance which is not only a good feeling, it’s good for business.
3. Invest in Your Products & Services
Investing in quality services and products can widen your target market and increase your brand awareness to make you stand out from the competition. As they say, you’ll need to spend money to make money. However, spend it smartly by doing your homework and improving components of your business that will let you reap the rewards years later.
You can use the cash from your ERC in 2022 to invest in new projects (before the other guys do). One strategy involves streamlining your operations through updating and matching your website to your customer service policies. If your website is looking great, then you can reverse this strategy and explore customer reviews to see if your policies and procedures need to change to provide a better customer experience.
You Have To Receive Your ERC 2022 Before You Can Spend It
Due to the popularity of the ERC — go figure, everyone likes free money — the longer you wait to apply, the longer you’ll have to wait to get your payroll tax refund from the IRS. If you’re interested in bringing cash back into your business sooner rather than later, Innovation Refunds (IR) can help.
Owned by banks and run by lawyers, tax professionals, and ERC experts, IR has already helped over 10,000 businesses claim their ERC for use in 2022 and beyond. You can also spread the word about IR’s ERC help to earn even more money for your business through our referral program. To learn more about IR, ways the ERC have revitalized businesses like yours, and the Refer & Earn program, check out our testimonials.