More Help for Small Businesses in the CARES Act

Included in the CARES Act are some less advertised forms of assistance that may be helpful. While we are still awaiting specific guidance from the government on details, we want to make you aware of these additional tools for your business survival arsenal: 

I. Employee Retention Credit 

Who is eligible? Employers, including non-profits, whose operations have been fully or partially suspended due to a government order, OR who have experienced a greater than 50% reduction in quarterly receipts, measured against the same quarter last year. 

How much is the credit? The credit is equal to 50% of the first $10,000 in wages and compensation, including health benefits, paid per employee per quarter.  Wages paid for sick leave or paid family leave do not count. 

How do I claim the credit? This is a refundable payroll tax credit claimed on the employer’s quarterly payroll tax report. 

When does the credit end? The credit stops once the business reopens, or revenues increase to 80% of the same quarter in the prior year. 

Caveat – This credit is NOT available to employers receiving Paycheck Protection Program assistance.  

II. Delay of Employer Payroll Taxes 

What is it? Employers may delay paying the employer half of Social Security taxes (not Medicare taxes) for employee wages paid from April 1, 2020 to December 31, 2020.  This amounts to a loan of 6.2% of gross wages, at 0% interest. 

Who is eligible?  Any employer who is not participating in the Paycheck Protection Program 

How is the loan repaid?  Half of the loan must be repaid at the end 2021 and half at the end 2022. 

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If you’d like more information or a review of which route your small business should take, please contact Sound Tax at 253-589-3564.