Construction Contractors Receive Benefits Through The Retention Credit For Employees

The Employee Retention Credit Can Help The Construction Industry

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The ERC program allowed a Louisiana welding business to receive a refund of 148,000. This was despite not having a decline in gross revenues. As previously stated, Eligible Employers can claim an ERC for 70%, for calendar quarters beginning after December employee retention credit 2022 qualifications 31, 2020, (increased from 50%) of Qualified Wages paid to employees after March 12, 2020 and before July 1, 2021. The maximum amount for the ERC that can be considered is $10,000 per quarter by an employee.

#2 Misconception: My construction business isn't eligible for ERC, as it did not experience a decrease of 50% or greater in gross receipts. Contractors can take advantage of the Employee Retention Credit during the first and last quarters 2021 before filing their employment tax returns. Employers with fewer than 500 employees - Any compensation paid during the time your operations were affected by one or both of the above scenarios is eligible for credit, regardless of whether the employees were employed. It takes some analysis to determine how many employees a company actually has for the 500 employee threshold.

Should Construction Companies Apply For The Employee Retention Credit

A company can be considered an Eligible Employer if it is eligible for the ERC from direct and indirect causes. Although you cannot claim PPP forgiveness and ERC credit for the exact same wages, you can maximize both the benefits. In general, it makes sense for you to claim the ERC in Q1 2021. Then, given that you have 24 hours to spend your PPP money, you can make strategic choices about which dollars are used for forgiveness.

In this instance, you would need to check Q3 revenues to determine if the decline was 20%. Additionally, if you need to qualify the effect of a nominal impact, ERC home improvement services further research is required and an interview with the IRS. When Congress passed the Coronavirus Aid, Relief and Economic Security Act , it enabled contractors and other businesses to choose the Employee Retention Tax Credit program or thePaycheck Protection Program.

Learn More About Aprio's Erc Options

If your company had W-2 employees in 2020 and 2021, you can qualify if you experienced impacts to your operations because your third-party vendors experienced supply shortages due to government-ordered shutdowns. An Eligible Employer claims the ERC is by reducing a quarter's required payroll tax deposits on its Form 941. Initially, the ERC is applied against the 6.2% employer's share of social security taxes due on all wages paid to all employees for the quarter. If the ERC exceeds this amount, the ERC may be offset against any remaining payroll tax liabilities by completing Form 941. This figure is higher than the tax credit that was available for 2020, which was half of qualified wages paid per person for all quarters (in other word, up to $5,000 per person).

Driving Financial Wellness For You And Your Employees

Third-party vendors faced shortages of materials necessary to keep the construction industry afloat, such as lumber or steel. For those in this sector, backlogs for basic building material orders have been evident for months. Inflation has accelerated due to backordering of supplies. This has led to increased lead times for projects, which has left those in the construction industry worried about the future of their businesses.

Many contractors have received employee retain credits in the last year and half, or are in process of receiving them. OnCentive, the nation's largest profitability consulting firm, has announced today that it will be able to fund clients' COVID-19 Employer Retention Credit. This will allow businesses to obtain a much-needed cash infusion without waiting on the Internal Revenue Service. OnCentive is now a secured funding partner and can qualify, file, fund, and file COVID-19 Employee Retention credits for clients within weeks. This will eliminate the typical eight-to-9 months turnaround IRS times. COVID-19 caused supply chains to be disrupted in an unprecedented way. Many of these disruptions still occur today.