[Editor’s Note: Eric Killian will offer a presentation about the Employee Retention Credit at 9 a.m. ET on June 16 as part of the free Future of Fitness virtual event. To attend, register here.]
You remember the Paycheck Protection Program (PPP) from last year’s government stimulus package, The CARES Act. Well, stimulus money is back in a big way, and even better than before.
The newest stimulus “kid on the block” is the Employee Retention Credit (ERC), and it’s even better than the PPP funding you are familiar with.
What is the Employee Retention Credit?
The ERC is a refundable tax credit from the IRS against certain payroll taxes in 2020 and 2021. It’s essentially more stimulus for your business to help you navigate the consequences of COVID-19. You can read the nitty gritty details here.
The ERC is actually not that new. It was part of the original CARES Act passed in March 2020. However, at that time, business owners had the option to take the PPP funds or take the ERC. In virtually every case, it made more sense for a business to take the PPP funds.
Fast forward to 2021, and the rules have changed.
As of earlier this year, business owners can now claim the ERC and the PPP, meaning most fitness businesses qualify for tens of thousands of dollars that they weren’t eligible for before.
Why Is ERC Better Than PPP?
Claiming PPP funding was critical for fitness businesses through COVID-19. And it is still is. However, there are several reasons why we are even more excited about the ERC.
For starters, you never have to pay this money back, and there is no forgiveness application or spending requirements.
If your tax credit exceeds your payroll taxes per quarter, you will receive a cash refund directly in your bank account. And typically your tax credit will exceed your payroll taxes per quarter, which is another reason we love the ERC: as a fitness business, you most certainly qualify.
If you’re a fitness business with at least one employee and less than 500 employees and you opened prior to February 2020, chances are great that you’re eligible.
To qualify for the ERC, your business must have either:
- Been shut down by city, county, or state regulations (hours reduced, location closed, partial capacity).
- Have had more than 50 percent decline in revenue in 2020 when compared to 2019 or more than 20 percent decline in revenue per quarter in 2021
If you still are not sure if you qualify, take our quick quiz to see.
How to Receive the ERC
Although the money you get back from the ERC is pretty straight forward, the application process to get it is quite complex.
We recommend using an experienced accountant (who has done a lot of ERC applications!) to apply on your behalf.
We won’t get into too much detail on the nitty gritty of calculations, but there are many factors to consider, including revenue per quarter, government shutdown regulations, eligible wages, PPP funding and more.
After the calculations are done, your accountant can claim your credit immediately by amending your payroll tax returns.
And after this, you will receive a refund in the form of a check.
Right now at The Fitness CPA, we’re making it even easier.
If you are a gym or fitness business, we will calculate the exact tax credit amount for your business – whether you are a client of ours or not – at zero cost.
How it works is simple. We will ask you for a few documents (like revenue figures and payroll reports), and we will calculate how much money you could receive back.
Once you receive the free calculation, you can either proceed with the work, or jump out at any point. It’s truly no obligation to you.
And this isn’t a sales pitch. We just really want to help as many fitness business owners as possible, especially through this challenging time.
We love this industry, and the government money is there for the taking. Why not help as many businesses as possible access it?
If you’d like to see how many thousands of dollars you can receive back for your gym or fitness business, get started with your free calculation here.
Eric Killian is a CPA and founder of The Fitness CPA. He is an accountant, husband, father, mountaineer. Fitness is a big part of who he is. Maintaining a healthy lifestyle, eating well (mostly paleo), hiking, backpacking, mountaineering, practicing yoga and Crossfit are all important cornerstones of life. But he loves ice cream and cookies too much to say no. He loves helping owners make sense of their business and finding ways to grow it. It’s an honor for him to help business owners see situations, scenarios and opportunities from all sides so you can make informed decisions.