What is the benefit comparison between small and large businesses?The benefits of Employee Retention Credit for small and large organizations vary. Small businesses with 100 or fewer full-time employees count as eligible employees. For a company with 100 employees or above, these employees should have received payment without providing services due to the shutdown or the wage reduction. The company size is not the only determinant but there are other factors that determine the eligibility for receiving credit.
For a start-up business, you may not be required to show a decline in revenue to qualify for the credit. It works if your business started operations after February 15, 2020, and has generated less than $ 1 million in average revenue in the last three years. It is still possible for a business to apply for the Employee Retention Credit for 2020; they are open until April 15, 2024, and 2021 is open until April 15, 2025. However, It is advisable to apply earlier as the credit amount the company would receive significantly lowers with time.
The Employee Retention Credit is fully refundable, and once the business is given the amount, they are not expected to pay it back as it is not a loan. You must file an amendment form 941X (Quarterly Federal Payroll Tax Return) to apply for this. It is only filed for the quarters during which the company was an eligible employer.
After submission of ERC compensation, the business may need to amend their income tax returns as well as the personal income tax returns. However, this should not deter you from applying for the ERC because aside from having an additional tax due, it will be way lower than what you will get from the ER.