6 Important Things to Know About Employee Retention Credit and The Role of BPOs6 Important Things to Know About Employee Retention Credit and The Role of BPOs6 Important Things to Know About Employee Retention Credit and The Role of BPOs6 Important Things to Know About Employee Retention Credit and The Role of BPOs
  • Inbound Calling
    • 24 7 Answering Service
    • Virtual Receptionist Service
    • Phone Answering Service
    • Customer Support Outsourcing
    • Outsourced Technical Support
    • Omnichannel Contact Center
    • Multilingual Call Center Services
  • Outbound Calling
    • Telemarketing Services
    • Lead Generation Services
    • Appointment Setting Services
    • Cold Calling Services
    • Outsource Telesales
    • Market Research Services
    • Survey Processing Services
  • BPO Services
    • Accounts Receivable Services
    • Accounts Payable Services
    • Back Office Services
    • Call Center Outsourcing Services
    • Certificate Intelligent Document Processing
    • Community Moderation Services
    • Data Management Services
    • Debt Collection Services
    • Loan Processing Call Center
    • Outsource Form Processing Services
    • Recruitment Process Outsourcing
    • Staff Leasing Services
    • Virtual Assistant Services
  • Industry
    • Healthcare BPO Support Services
    • Legal Outsourcing Services
    • BPO Real Estate Services
    • Insurance BPO Services
    • Retail Outsourcing Services
    • eCommerce Outsourcing Service
    • Mobile App Customer Support
    • HR Outsourcing Services
    • 3D Rendering Services
    • Travel Outsourcing Services
    • Telecom BPO Services
    • Education Process Outsourcing
    • eServices Call Center
  • Content Hub
    • Blog
    • Resources
  • About Us
    • Facilities
    • Sample Recordings
    • Message From The CEO
    • Management Team
  • Contact Us
  • #1 SME Call Center Services and BPO Outsourcing Provider in the Philippines
    • Board of Directors
    • Company Overview
    • 24/7 Reservations Call Center
    • Accounting and Finance Operations
    • Applied Engineering
    • Computer Aided Drafting Service (CAD)
  • About Us
    • Application Sent
    • Blog
    • BPO Solutions
    • Accounts Payable Processing
✕
Santa Clause and gifts in How to Increase Your Sale This Holiday with an Outsourced Seasonal Staffing banner
How to Increase Your Sales This Holiday with an Outsourced Seasonal Staffing

6 Important Things to Know About Employee Retention Credit and The Role of BPOs

Employee Retention Credit and the Role of BPOs

Employee Retention Credit and the Role of BPOs

The Congress established the Employee Retention Credit (ERC) during 2020 to lessen the consequences of the COVID-19 pandemic. The ERC is for businesses who struggled to maintain their headcounts. With Employee Retention Tax Credit (ERTC), businesses can use a refundable credit as a tax deduction for some expenses.

The employee retention tax credit became even more enticing when it could be combined with the Paycheck Protection Program (PPP). In order to cover the disruption in 2021, it has since been extended. The interaction of these variables prompts several crucial queries regarding the employee retention tax credit’s explanation. Below is a brief overview that we have put together to help your company better understand your alternatives.

WHAT IS EMPLOYEE RETENTION CREDIT?

The Employee Retention Credit was introduced by the Congress in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to encourage firms to retain their workers on the payroll throughout the COVID-19 pandemic last 2020. This credit is applicable to employees in the United States of America. 

Under the initial terms of the tax credit, a maximum credit of US$5,000 was permitted for salaries earned between March 13, 2020 and December 31, 2021. Since then, an update has brought the percentage of qualifying earnings up to 70% for 2021. The per-employee salary ceiling was raised from US$10,000 annually to US$10,000 quarterly. 

All qualified firms that pay employees appropriate wages are entitled for the credit. However, there are separate restrictions that apply to employers with fewer than 100 and fewer than 500 employees.

WHAT IS EMPLOYEE RETENTION TAX CREDIT?

A widespread refundable tax benefit called the employee retention tax credit was created to promote employers must continue paying their employees. 50% of the first US$10,000 in earnings paid by an employer is credited. A business owner whose operations are wholly or partially interrupted due to COVID-19 or whose gross receipts greater than 50%.

6 IMPORTANT THINGS TO KNOW ABOUT EMPLOYEE RETENTION CREDIT 2022

We have listed the things you need to know regarding employee retention credit. 

#1) HOW MUCH IS THE ERC PER EMPLOYEE?

For 2020: The maximum ERC per employee is US$5,000.

For 2021: In the first three quarters of the year, the maximum ERC is US$7,000 per employee and quarter, for a total maximum ERC of US$21,000 per employee.

Businesses can refund the tax credit with an amount up to US$26,000 per employee. 

#2) EMPLOYEE RETENTION CREDIT ELIGIBILITY

To be a qualifying employer, you must be able to demonstrate that your business experienced one of the following:

  • Your business experienced a partial or total shutdown during 2020 or 2021 (including being constrained by commerce, being unable to travel) 
  • Gross receipt reduction

Businesses that had to cease operations completely or partially as a result of COVID-19 government limitations. Additionally, companies qualify for the employee retention credit if they lost 50% of their gross receipts from the same quarter. 

A trade or business that must cut back on hours due to a government edict, either completely or partially. Only the portion of the quarter during which business is interrupted is eligible for the credit.

An employer whose gross receipts have significantly decreased.

  • The IRS published in August 2021 the Revenue Procedure 2021-33 which offers a safe harbor under which an employer may exclude the amount of a PPP loan forgiveness and the amount of a Shuttered Venue Operators Grant or a Restaurant Revitalization Fund grant from the definition of gross receipts solely for the purpose of determining eligibility to claim the ERTC. Employers are required to consistently apply the safe harbor to all organizations.

#3) WHAT SALARIES CAN BE USED TO QUALIFY FOR THE EMPLOYEE RETENTION CREDIT?

Qualified wages are any wages paid to an employee by an eligible employer between March 12, 2020 and January 1, 2021. Given the company’s reduced gross sales or any shutdown, all wages provided to employees are treated as qualifying compensation.

The employee retention credit is a grant-like that can be reimbursed to the employee. You can reimburse depending on your salary, health insurance, and other personnel costs that you have already paid. Regardless of size or sector, all firms can use the employee retention tax credit.

#4) HOW DO YOU CLAIM THE EMPLOYEE RETENTION CREDIT?

You can claim the employee retention credit by lowering your business’ employment tax payments before filing your quarterly employment tax returns. Using IRS Form 7200, certain employers can ask for the credit to be paid in advance.

If the employee retention tax credit exceeds the employer’s overall tax liability, the excess will be returned to the business owner.

It is crucial to ensure that all eligible expenses are included on PPP loan forgiveness forms in order to maximize the acceptable wages available for employee retention credit. 

#5) WHAT ARE THE ADVANTAGES OF TAKING THE EMPLOYEE RETENTION CREDIT?

Not having to pay a significant amount of payroll tax is the employee retention credit’s primary benefit for small businesses. This will provide them with more cash which they can use to keep their company afloat. Now that more individuals are vaccinated, some businesses are using the tax credit to meet an increase in demand.

Another advantage is that a Payment Protection Program (PPP) loan can now be used in addition to the employee retention credit. Business owners can now enjoy combining their PPP loan and tax credit. The employee salary used to get a PPP loan forgiveness, however, cannot be used to determine the employee retention credit amount.

#6) CAN I CLAIM EMPLOYEE RETENTION CREDIT AND PPP TOGETHER?

Absolutely! Initially, you could not get the employee retention tax credit if you took out a PPP loan. The Consolidated Appropriations Act (CAA), which was passed in December 2020, declared that allowing small businesses to take advantage of both opportunities as long as they complied with the regulations and met the eligibility conditions. On PPP forgiveness application, it is important to keep in mind that businesses cannot identify a payroll expense as an employee retention tax credit wage and a payroll cost.

THE ROLE OF BPO IN EMPLOYEE RETENTION CREDIT & WHY SHOULD YOU OUTSOURCE EMPLOYEE RETENTION TAX CREDIT?

The financial statements must include information about the accounting method used, significant terms, and the amounts reflected.

Here is why employee retention tax credit should be outsourced. Here are just a few of the many benefits of outsourcing ERTC:

employee retention tax credit

Source: Magellan Solutions

#1) EXPERTISE 

ERTC may be challenging to understand. Internal challenges may arise for your teams as they try to complete this process, especially as standards and laws evolve.

This duty can be outsourced to professionals who are entrusted with staying up to date with the regulations.

The frequent mistakes made by unqualified staff can be avoided with the help of outsourced ERTC service providers. With the help of cutting-edge technology, experts can guarantee that this task is completed accurately and on time.

#2) FOCUS ON CORE TASKS

In a developing business competing in a competitive labor market, human resources are scarce. By outsourcing, you can give your employees more time to work on other important project facets of the business.

You get access to a knowledge source where you can immediately handle any issues or problems that can emerge.

#3) ENSURED COMPLIANCE 

Filing an employee retention tax credit may be challenging and sluggish given the diversity of state requirements that must be satisfied. This is especially true for larger firms with activities in many different states and cities.

Audits and hefty fines could be the outcome of even a single error. Indeed, as more countries fail to comply, the penalties and fines can become increasingly severe.

By avoiding punitive measures, outsourcing employee retention tax credits to a skilled outsourcing company can help ensure compliance and save money.

#4) COST REDUCTION

Errors in calculations and filing could have detrimental effects. In either scenario, these activities must be undone, involving more time and expense for firms to fix their mistakes.

Employee retention tax credit may be outsourced to guarantee fair pay to employees and that the necessary documentation is performed correctly. These experts can help businesses avoid excessive fines, freeing up resources for other important tasks.

#5) BE INFORMED WITH THE CHANGES

You might not be able to keep up with the rules and regulations as they change depending on your financial circumstances. Where outsourcing ERTC can be useful is in this situation.

Experts possess a wide range of knowledge and have awareness of the frequent changes. It is guaranteed that there are no errors made when claiming ERTC.

WRAPPING IT UP

The employee retention credit was established in order for small business owners to pay their employees throughout the COVID-19 outbreak. End of 2021 marked the end of the credit.

Employers still have time to submit a credit claim for the period of March 2020 until September 2021. For the months of March 2020 through December 2021, startup firms in recovery can still file.

Outsourcing employee retention tax credit is a wise business decision. This action provides organizations access to skilled talents who make use of advanced technology in order to avoid hefty fines.

You can start to outsource your ERTC to BPO companies that provide accurate solutions and results. 

OUTSTANDING OUTSOURCING SERVICES AWAITS YOU HERE IN MAGELLAN SOLUTIONS

Magellan Solutions takes pride in providing top-notch outsourcing and customer services for your business’ goals. 

With more than 18 years of experience in the field, we are proud to offer only quality call center services for SMEs. On top of that, we are an outsourcing company that is ISO- and HIPAA-compliant. 

Contact us and let us discuss your company needs. 

TALK TO US!

Contact us today for more information.

    You can also contact our numbers:

    Toll Free:1 800 371 6224
    US:+1 650 204 3191

    UK:+44 8082 803 175,
    AU:+61 1800 247 724

    Share this:

    • Click to share on Twitter (Opens in new window)
    • Click to share on Facebook (Opens in new window)
    • Click to share on LinkedIn (Opens in new window)
    • Click to share on Skype (Opens in new window)
    • Click to share on WhatsApp (Opens in new window)
    Janselle Miguel
    Janselle Miguel

    Related posts

    Santa Clause and gifts in How to Increase Your Sale This Holiday with an Outsourced Seasonal Staffing banner
    November 18, 2022

    How to Increase Your Sales This Holiday with an Outsourced Seasonal Staffing


    Read more - How to Increase Your Sales This Holiday with an Outsourced Seasonal Staffing
    Business Sectors That Need Phone Answering Service This 2022 banner
    October 10, 2022

    10 More Business Sectors That Badly Need Phone Answering Service This 2022


    Read more - 10 More Business Sectors That Badly Need Phone Answering Service This 2022
    10 EXAMPLES OF BAD OUTSOURCING AND HOW TO AVOID THEM banner
    August 31, 2022

    10 Examples of Bad Outsourcing and How to Avoid Them


    Read more - 10 Examples of Bad Outsourcing and How to Avoid Them
    A blog banner by Magellan Solutions titled 10 Essential and Uncommon Services SMEs Don’t Have That BPO Philippines Can Provide
    July 6, 2022

    10 Essential Services SMEs Don’t Have That BPOs Can Provide


    Read more - 10 Essential Services SMEs Don’t Have That BPOs Can Provide
    Why Outsourcing Is A Smart Move In Volatile Economic Times banner
    May 17, 2022

    Why Outsourcing Is A Smart Move In Volatile Economic Times


    Read more - Why Outsourcing Is A Smart Move In Volatile Economic Times
    Benefits of Outsourcing Bookkeeping Services Banner by Magellan Solutions
    March 10, 2022

    Benefits Of Outsourcing Your Bookkeeping Services


    Read more - Benefits Of Outsourcing Your Bookkeeping Services

    Magellan Solutions Outsourcing, Inc

    California – USA (West Coast)
    100 Old Country Road Suite H, Brisbane, CA 94005, United States

    Florida – USA (East Coast)
    1900 South Harbor City Blvd, (East Coast Division) Suite 300 Box 48, Melbourne, FL 32901

    Philippines – APAC
    PB Mezzanine Floor, Summit One Tower 530 Shaw Boulevard, Mandaluyong City,
    Metro Manila 1552

    Philippines – APAC
    8th flr, Centris Cyberpod 5
    ETON Loop A, Diliman,
    Quezon City,
    Metro Manila 1103

     

    US: +1 650 204 3191
    UK: +44 8082 803 175
    AU: +61 1800 247 724
    hello@magellan-solutions.com

    INDUSTRIES


    Outsourcing for Legal Process BPO

    Outsourcing for HR Services BPO

    Outsourcing for eCommerce BPO

    Outsourcing for Real Estate BPO

    Outsourcing for 3D Service BPO

    Outsourcing for Mobile App BPO

    Outsourcing for Healthcare BPO

    Outsourcing for eServices BPO

    Outsourcing for Education BPO

    Outsourcing for Insurance BPO

    Outsourcing for Telecom BPO

    Outsourcing for Retail BPO

    Outsourcing for Travel BPO

    CALL CENTER OUTSOURCING & BPO SERVICES


    24 7 Answering Service

    Omnichannel Contact Center

    Customer Support Outsourcing

    Multilingual Call Center Services

    Lead Generation Services

    Cold Calling Services

    Interactive Voice Response System

    Staff Leasing

    Back Office Services

    Community Moderation Services

    Virtual Assistant Services

    QUICK LINKS

    About Us
    Sample Call Recordings
    News & Blog
    Resources
    Our BPO & Call Center Facilities
    Message from the CEO
    Privacy Policy

    ASSOCIATIONS

    Black and white Supplier Clearinghouse CPUC Certification Logo
    black and white philcall logo
    black and white Philippine Australia Business Council logo
    Black and white IBPAPlogo
    Black and white CCAP logo

    We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
    .
    SettingsI ACCEPT
    Privacy & Cookies Policy

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
    Functional
    Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
    Performance
    Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
    Analytics
    Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
    CookieDurationDescription
    _ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
    _ga_EL2X6L0QDM2 yearsThis cookie is installed by Google Analytics.
    _gat_gtag_UA_6034499_11 minuteSet by Google to distinguish users.
    _gcl_au3 monthsProvided by Google Tag Manager to experiment advertisement efficiency of websites using their services.
    _gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
    Advertisement
    Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
    CookieDurationDescription
    test_cookie15 minutesThe test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
    Others
    Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
    SAVE & ACCEPT
    Powered by CookieYes Logo