Understanding the Employee Retention Tax Credit
As an advertising agency, you may be eligible for the Employee Retention Tax Credit (ERTC), which is a refundable tax credit aimed at encouraging employers to retain employees during the pandemic. The ERTC is a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and can help businesses reduce their payroll tax liability by up to $7,000 per employee per quarter.
Eligibility Requirements for ERTC
To qualify for the ERTC, an advertising agency must meet the following criteria:
- The business must have experienced a significant decline in gross receipts due to the pandemic. Specifically, the gross receipts in a quarter must be less than 50% of the gross receipts for the same quarter in the previous year.
- The business must have had operations fully or partially suspended due to a government order related to COVID-19, or must have experienced a significant decline in gross receipts.
- The business must have had an average of 500 or fewer full-time employees during 2019.
How ERTC Works for Advertising Agencies
If you meet the eligibility requirements for the ERTC, you can claim a tax credit of up to 70% of qualified wages paid to each employee, up to a maximum of $10,000 per employee per quarter. Qualified wages include wages paid to employees who are not working due to a government order or a significant decline in gross receipts, as well as wages paid to employees who are working.
How Much Can You Save with ERTC?
The amount of money you can save with the ERTC depends on several factors, including the number of employees you have, the amount of qualified wages you pay them, and the extent of your gross receipts decline. However, in general, if you are eligible for the ERTC, you can save up to $28,000 per employee per year.
Now that you understand what the ERTC is and how it works for advertising agencies, let's take a closer look at the benefits of this tax credit for your business.
Benefits of Employee Retention Tax Credit for Advertising Agencies
The Employee Retention Tax Credit (ERTC) can provide various benefits for advertising agencies during the pandemic. Here are some of the key advantages of claiming the ERTC:
How ERTC Can Help Retain Employees
One of the primary benefits of the ERTC is that it can help advertising agencies retain employees during the pandemic. By offering tax incentives to businesses that retain their employees, the ERTC can help prevent layoffs and furloughs, which can be damaging to morale and productivity.
How ERTC Can Help Businesses During the Pandemic
The ERTC can also help advertising agencies navigate the economic challenges posed by the pandemic. By reducing payroll tax liability, the ERTC can free up funds that businesses can use to cover expenses such as rent, utilities, and supplies. This can be especially helpful for small businesses that may be struggling to make ends meet.
Examples of Businesses That Benefited from ERTC
Many businesses have already benefited from the ERTC, including advertising agencies. For example, according to Haley Marketing, staffing agencies that were struggling during the pandemic were able to claim the ERTC and use the funds to keep their employees on payroll. Similarly, BDO reports that businesses of all sizes and industries have been able to benefit from the ERTC.
In the next section, we'll take a closer look at how to claim the ERTC for your advertising agency.
How to Claim Employee Retention Tax Credit
If you meet the eligibility requirements for the Employee Retention Tax Credit (ERTC), you can claim the credit on your quarterly employment tax returns using Form 941. Here are the steps you need to follow to claim the ERTC:
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Determine your eligibility: Before claiming the ERTC, make sure you meet the eligibility requirements outlined in Section 2. If you're not sure whether you qualify for the credit, consult with a tax expert.
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Calculate your credit amount: To calculate your credit amount, multiply the qualified wages you paid to each employee by the percentage of the credit you're eligible for (up to 70%). The maximum qualified wages per employee are $10,000 per quarter.
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Claim the credit on Form 941: You can claim the ERTC on Form 941, which is the quarterly employment tax return. The credit will be applied against the employer's share of Social Security tax liability. If the credit exceeds the employer's Social Security tax liability, the excess will be refunded to the employer.
What Documents Are Required to Claim ERTC?
To claim the ERTC, you'll need to provide documentation to support your claim. This may include:
- Records of gross receipts from 2019 and 2020
- Documentation showing the decline in gross receipts
- Documentation showing the suspension of operations due to a government order
- Records of qualified wages paid to employees
How to Avoid Scams Related to ERTC
As with any tax credit, there is the potential for scams related to the ERTC. To avoid falling victim to a scam, be cautious of any offers that seem too good to be true, and only work with reputable tax experts who have experience with the ERTC. The IRS has also urged victims of fraud or phishing attempts to report it to them and call the Treasury Inspector General for Tax Administration, as mentioned in The Hill.
In the next section, we'll take a closer look at how tax experts can assist you with calculating and claiming the ERTC.
How Tax Experts Can Assist with ERTC
Calculating and claiming the Employee Retention Tax Credit (ERTC) can be complex, especially for advertising agencies that may have unique payroll structures and employment arrangements. Here's how tax experts can assist your advertising agency with claiming the ERTC:
Determine Eligibility
Tax experts can help you determine whether your advertising agency meets the eligibility requirements for the ERTC. By reviewing your financial records and understanding your business operations, tax experts can provide guidance on whether you qualify for the credit and how much you may be eligible to claim.
Calculate Credit Amount
Tax experts can also assist with calculating the amount of the ERTC your advertising agency is eligible to claim. By reviewing your payroll records and understanding your employment arrangements, tax experts can help you determine the qualified wages you paid to each employee and the percentage of the credit you're eligible for.
Provide Documentation
Tax experts can also help you gather and organize the documentation required to support your ERTC claim. By ensuring that you have all the necessary records and documentation, tax experts can help you avoid delays or issues with your claim.
Ensure Compliance
Finally, tax experts can help ensure that your advertising agency is in compliance with all the ERTC guidelines. By keeping up-to-date with the latest regulations and requirements, tax experts can help you avoid penalties or other issues related to your ERTC claim.
Haley Marketing and BDO Assistance
As mentioned in Haley Marketing](https://www.haleymarketing.com/2021/06/11/employee-retention-tax-credit-staffing-firms-eligible/) and [BDO, these companies provide assistance with identifying, documenting, and claiming the ERTC. They can help you navigate the complexities of the ERTC and ensure that you maximize your eligible credit amount.
In the next section, we'll discuss some final considerations for advertising agencies looking to claim the ERTC.
Final Considerations
Before claiming the Employee Retention Tax Credit (ERTC), there are a few final considerations that advertising agencies should keep in mind. Here are some key points to keep in mind:
Deadline for Claiming the ERTC
The deadline for claiming the ERTC has been extended until December 31, 2021. This means that advertising agencies still have time to claim the credit for eligible wages paid from March 13, 2020, through December 31, 2021.
Increased Scrutiny
As mentioned in IRS.gov, the ERTC has been added to the IRS's Dirty Dozen list of tax scams. This means that businesses claiming the credit may be subject to increased scrutiny, especially if they work with aggressive promoters who make offers that seem too good to be true.
Consult with Tax Experts
To ensure that your advertising agency is in compliance with all the ERTC guidelines and regulations, it's important to consult with tax experts who have experience with the credit. By working with tax experts, you can maximize your eligible credit amount and avoid penalties or other issues related to your claim.
Report Fraud or Scams
If you suspect that your advertising agency has been the victim of fraud or a scam related to the ERTC, it's important to report it to the IRS and call the Treasury Inspector General for Tax Administration. By reporting fraud or scams, you can help protect your business and prevent others from falling victim to similar schemes.
In conclusion, the Employee Retention Tax Credit can provide significant benefits for advertising agencies during the pandemic. By understanding the eligibility requirements, calculating your credit amount, and working with tax experts, you can maximize your eligible credit amount and navigate the complexities of the ERTC.
Unlock Hidden Benefits with the ERTC for Ad Agencies
The Employee Retention Tax Credit (ERTC) can provide significant benefits for advertising agencies during the pandemic. By understanding the eligibility requirements, calculating your credit amount, and working with tax experts, you can maximize your eligible credit amount and navigate the complexities of the ERTC.
Don't miss out on the opportunity to unlock hidden benefits for your advertising agency with the ERTC. Contact Haley Marketing or BDO for assistance with claiming the credit today!
And be sure to check out our other great content for more insights and tips on navigating the complexities of taxes and finance.
Questions & Answers
Who is eligible for the employee retention tax credit for advertising agencies?
Advertising agencies that continued to pay employees during the pandemic or experienced a significant decline in gross receipts may be eligible for the ERTC.
What is the employee retention tax credit for advertising agencies?
The ERTC is a refundable tax credit aimed at encouraging employers to retain employees during the pandemic.
How much can advertising agencies receive with the employee retention tax credit?
Eligible advertising agencies can receive up to $28,000 per employee with the ERTC.
Who can assist advertising agencies with claiming the employee retention tax credit?
Haley Marketing and BDO are two companies that provide assistance with identifying, documenting, and claiming the ERTC.
What is the deadline for claiming the employee retention tax credit for advertising agencies?
Advertising agencies have until December 31, 2021, to claim the ERTC for eligible wages paid from March 13, 2020, through December 31, 2021.
How can advertising agencies avoid issues related to the employee retention tax credit?
By consulting with tax experts who have experience with the ERTC, advertising agencies can ensure compliance and avoid penalties or other issues related to their claim.
