In the midst of the pandemic, the government introduced the employee retention credit. This scheme was designed to help businesses that may be struggling through the pandemic to keep employees on the payroll. The employee tax credit would offer up to $5,000 for each employee that was kept in employment during 2020, and up to $14,000 per employee kept in employment during 2021.
On this page, we want to discuss a few ways that this employee retention credit can be helpful to a business owner.
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Keep Staff on the Payroll
One of the major benefits of employee retention credit is that it allows you to keep staff on the payroll.
Normally, during a downturn in business, you may have little choice but to let employees go. This can drastically reduce morale among staff. You may also be letting good employees go. Not to mention the fact that when you see an upswing in business again, you will have to spend a lot of money on recruitment.
The Employee Retention Credit allows you to keep staff in employment. This means that you do not lose any of the good people working for you. It also helps to keep productivity high as staff will no longer be living under the threat of potentially losing their jobs.
Save Money During the Pandemic
One of the biggest expenses for any business will be salary.
The Employee Retention Credit, effectively, reduces salary costs quite drastically. In fact, we wouldn’t be surprised if, for many businesses, access to this credit can mean the difference between profit and loss for their business.
When you save money, you have a much stronger chance of being able to stay in business. Remember, this credit is not just about ensuring that your employees are well looked after during the pandemic. It is all about ensuring that the businesses in the United States continue to operate. Gaining access to this tax credit may be exactly what you need to ensure that your business continues to operate for years and years to come.
Immediate Access to Credit
This is a tax credit. However, you don’t have to wait until tax season rolls around. You will be able to claim the tax credit when you file payroll. This will provide your business with much-needed funds almost right away.
This has the benefit of providing you with more cash that you can use to grow your business. All of this is going to be your money. There are no loans to pay back. No interest rates. Nothing. You now have money that you can use to grow your business however you see fit.
Final Word
This is just scratching the surface of the direct benefits to your business. There may also be a lot of indirect benefits. For example, the more people in employment, the more money flowing around the economy. Some of this money can potentially filter through to your business, particularly if you are an end consumer-focused business.
Remember, most businesses do qualify for employee retention credit, even if your staff are mostly still working. Make sure that you consult the updated legislation for 2021 as there are a few changes from 2020.
