Many small-scale businesses were able to claim the U.S. government’s Paycheck Protection Plan(PPP). Similarly, employers who kept their employees on payroll during the pandemic can claim the Employee Retention Credit(ERC). Although, some business owners and employers are unaware of either term. Getting to know these terms and plans will benefit all business owners.
Most employers can qualify for all six quarters of ERC. The eligibility and the qualification for each plan and credit can play a significant role. Many business owners have had the query about claiming both ERC and PPP simultaneously. It will help if you read the article below to know more about claiming such credits.
Highlights about ERC:
Before we jump right into ERC and PPP together, it would be helpful if you knew each term properly. Employee Retention Credit is a tax credit awarded to employers who kept their employees on the payroll while facing shutdowns in their business.
The Covid-19 pandemic forced many businesses to limit their services to their clients. In such cases, many employers and business owners did not terminate employees. Instead, they prevented each employee from being unemployed.
In a nutshell, employers can get tax credits or refunds on their tax returns if they retained employees during the pandemic by continuing payroll, paying health insurance costs, etc.
Highlights about PPP?
The paycheck Protection Program(PPP) helps small businesses by providing essential resources. The business owner can rely on PPP when their business needs resources to hire employees who were laid off, maintain their payroll, and cover overhead costs.
PPP may sound similar to ERC in nature. This program is mainly focused on small-scale businesses. PPP helps small-scale companies by lending them funds to cover up to eight weeks of employees’ costs. These funds can also be used to pay mortgages or rent. PPP is similar to a loan.
Can I get both ERC and PPP funds?
Yes. An employer can get both ERC and PPP funds. However, the employer might not include wages and costs covered by PPP for ERC.
The employer must know that PPP funds are only used for eight to ten weeks of wages, whereas the ERC credits are eligible for salaries ranging for a longer time, and can be claimed retroactively for the years 2020 and 2021. The employer must contact an ERC specialist before applying for both credits. Some set of conditions should be followed before using each. An ERC specialist might be able to point out such requirements.