There are 10,542,673 people on the payroll or receiving a W-2 in Florida's civilian workforce. There are presently an estimated 320,591 jobless Floridians, while the state's unemployment rate stands at 3%. This is as of April 2022 according to the Florida Department of Labor and Employment and the U.S. Bureau of Labor Statistics (BLS).
You may save up to $26,000 per employee by taking advantage of the Florida Employee Retention Credit (ERC) program, which many Florida companies and small business owners are either unfamiliar with or unsure of how to access.
The Employee Retention Credit (ERC) in Florida...what exactly is it?
A tax credit subsidy equivalent to half of the eligible pay provided by a qualifying employer between March 12, 2020, and January 1, 2021, is available through the Florida Employee Retention Credit (ERC) or the Florida Employee Retention Tax Credit (ERTC) for FL for small companies financially impacted by COVID.
Reduced payroll taxes for W-2 employees are available immediately to Florida businesses that qualify for the federal IRS tax credit.
Unless the firm is in the midst of recovering from a financial setback, the Retaining Employee's Credit will only apply to salaries received after October 1, 2021, under the amendments made to section 3134 of the Tax Code by the Capital Spending and Jobs Act of 2021. You may learn more about the Employee Retention Credit's abrupt demise by reading the IRS's announcement of the change.
Also, the IRS may prepay the employer if it determines that the taxes paid by the Florida business are inadequate to cover the employment credit.
Read on to learn more about how to apply for the ERC / ERTC Tax Credit for your Florida small company. Here, you'll find detailed information about Florida's Employee Retention Credit program and the tax benefits it offers to businesses.
Retain Employees in Florida and Receive Tax Credits of Up to $26,000 Each
Wages (including Qualified Health Plan Expenses) up to $10,000 per employee can be used to determine the amount of the 50% credit. For wages paid before March 12, 2020, many struggling firms can take advantage of this benefit by lowering future payments or applying for an advance refund using IRS Form 7200, Advanced of Employee Credits Due to COVID-19.
Employers in Florida, especially tax-exempt organizations, can reapply for the credit in 2020 if they run a commercial enterprise and are experiencing one of the following difficulties:
● Because of government orders prohibiting business, travel, or public meetings because of the COVID-19 epidemic, a complete or partial cessation of trade or activity during any calendar quarter.
● There was a precipitous fall in total revenue, and business was halted altogether.
Gross sales fall precipitously when any of the following occur:
● For the 2020 fiscal year, the first quarter began on January 1.
● The Recovery startup company's quarterly revenue is around half of what it was during the same period a year ago.
There will be no further major drop in gross revenues:
● The beginning of the calendar quarter that follows the preceding calendar quarter
● When gross revenue as a percentage of total sales exceeds 80%
● 2019 for the same quarter of the year
This credit applies to health insurance premiums that were suspended in addition to the salary paid during this period or any calendar quarter.
Explaining Florida's Employee Retention Tax Credit (ERTC)
Since the coronavirus has caused so much damage in Florida and elsewhere, the state has made certain payroll tax credits available to businesses there. To encourage businesses to retain their staff, the government offered a tax credit that can be refunded in full.
The General Appropriations Act (GAA) extended the Employee Retention Tax Credit (ERTC) in Florida through December 2020. The ERC was retroactively repealed for most firms through the Capital Spending and Jobs Act on September 30, 2021.
The refundable Employee Retention Tax Credit established by the CARES Act is equal to fifty percent of qualified wages provided to qualified employees from March 13, 2020, until December 31, 2020.
Credit for Retaining Small-Business Employees in Florida
In comparison to January 2019, 34% more small businesses closed their doors in January 2020. That's a staggering number for the millions of Americans who fought and struggled to achieve their dreams.
However, there is some encouraging news for Florida's commercial enterprises.
It's possible that the 2021 Employee Retention Credit may have helped your small business if it had been hit by the epidemic. There still could be a chance, to be really honest. Let's discuss employee retention credit and how it could help your business before diving into the application process.
To aid small businesses in the wake of the COVID-19 epidemic, the CARES Act was passed in March 2020. The goal was to ensure they had the resources to continue paying their employees and avoid layoffs.
To provide companies additional time to apply for the credit, the ERC was extended until the end of 2021 under the American Rescue Package. Qualified earnings earned after March 12, 2020, but before January 1, 2021, are eligible for the Retaining Employees Credit, as stated by the Internal Revenue Service.
SO, WHAT EXACTLY IS AN ERTC?
If your business anticipates a large drop in gross revenue or may be forced to close because of COVID-19, you may be eligible for the Employee Retention Credit (ERC), a refundable tax credit.
Employees who qualify may get a tax credit worth half of their qualifying earnings between March 13, 2020, and December 31, 2020, up to a maximum of $10,000 per employee. The tax credit remains set at $10,000 per employee per quarter in 2021 but is increased to 70% of eligible salaries.
The ERC's mission is to help businesses retain workers and cut down on the number of persons seeking benefits for unemployment.
EMPLOYEE RETENTION CREDIT (ERC): WHAT IS IT?
Companies that lost employees because of COVID-19 may be entitled to a tax benefit, but they might not know it. This tax credit, which can be refunded to the business, serves as an incentive for companies to keep workers in employment.
The ERC law has been extended until January 1, 2021, according to the Consolidated Appropriations Act. Any businesses that took out PPP loans in 2020 or 2021 may now be eligible for the ERC thanks to this extension. Due to the novelty of the ERTC service and the ever-changing nature of the law, experts are on hand to check that your claim follows all current IRS guidelines and meets all qualifying conditions per service each week.
EMPLOYEE RETENTION CREDIT PROGRAM: WHAT IS IT?
The Coronavirus Aid, Rehabilitation, and Financial Stability Act mandated the creation of the Employee Retention Credit Program. In essence, the scheme provides qualifying firms with an instant reimbursement of employment tax credits.
Its goal is the same as that of the Paycheck Protection Program: to enable businesses to continue paying their employees even if some of them become ill or otherwise unable to work between March 13 and December 31, 2020.
Florida Employee Retention Credit Program
The program consisted of the Payroll Protection Program from the Small Business Administration and the Employee Retention Tax Credit from the Internal Revenue Service, both aimed at assisting businesses in keeping their employees.
PPP funds are dispersed according to 2.5 months of payroll, with a required minimum of 80% utilization on payroll before forgiveness may be granted. PPP funds are not considered taxable income, and you may still deduct salaries paid while participating in the PPP.
Nonetheless, ERTC tax credits are payroll credits for a percentage of each eligible quarter's payroll. Specific criteria are used each quarter to determine eligibility and limit the amount of money that may be claimed by each Employee.
In 2021, the process for obtaining the ERC was the same as the one outlined above for 2020. Don't forget to include the aforementioned changes to the CAA.
If your company has 500 or fewer full-time employees in 2019, you may be eligible for advance payment of the benefit by submitting Form 7200, Advancement of Employer Credits Due to COVID-19. Companies with more than 500 workers will no longer be eligible for wage increases after 2021.
How Does a Retention Credit in Florida Work?
Companies can apply to join this program and take part in its benefits. However, employees gain since they will continue to get paid even when they are unable to return to work due to the pandemic.
How Does It Work?
Paycheck Protection Program users were formerly ineligible for the Employee Retention Credit, but that is no longer the case. If you take out a PPP loan and repay it by May 14, 2020, you will still be eligible for the Employee Retention Credit. Tax-exempt organizations can also use this credit.
Candidates who do not qualify are:
● Individuals who obtained a Small Business Interruption Loan
● Government employers
● People who are self-employed
Each eligible full-time Employee that you keep on staff will earn you a tax credit of $5,000 each year. In May, the plan was updated to incorporate medical expenses into compensation.
A tax benefit that would ordinarily be available at tax time can now be claimed immediately. The credit would be applied to a future payroll tax payment to the IRS.
Do I Need To Use The Employee Retention Credit?
The Employee Retention Credit can be used in two ways by businesses: for healthcare and for other incentives to keep employees.
● If an epidemic in the first three months of 2020 forces you to close all or part of your firm, or
● Regardless of whether the reduction was caused by the pandemic, the IRS considers a considerable decline in gross receipts if your gross sales dropped below 50% of what they were overall in the corresponding quarter of 2019.
If you've lost a lot of money since shutting down your cinder block shop but are ready to keep going with other types of business, including internet shopping, you may still be eligible for the program.
Understanding Florida's Employee Retention Credit for Busines
The Retaining Employees Credit (ERC) was created as part of the CARES Act to offer financial incentives to firms that maintain a full staff.
Employers that meet the requirements can receive the ERC for wages paid between March 13, 2020, and October 30, 2021.
It's available whether or not the company in question has been designated as "essential" or has received any SBA PPP loans. Equal to 50% of eligible salaries up to $10,000 in 2020 and 70% of eligible income up to $10,000 in the first three-fourths of 2021. Each W-2 employee or worker is eligible to receive up to $26,000 in ERC benefits.
Successful ERC refund claims are submitted retrospectively, leading to direct payments to businesses.
Both for-profit and non-profit organizations can apply for assistance from the ERC if they have:
● Ceased operations in whole or in part due to federal, state, or local government orders prohibiting commerce, travel, or assembly in relation to Covid-19; or
● The quarterly total revenue was considerably lower than the previous quarter.
Completely shutting down operations usually means that a business can no longer accept customers. An incomplete process calls for more qualitative research
According to IRS rules, if you had a full-service restaurant but were forced to limit your in-house dining capacity or cut your hours due to Covid-19, but could still offer takeout, delivery, and other similar services, you should be eligible for the ERC.
In order to optimize a refund claim, an in-depth analysis is needed to determine if an employer meets the qualifying conditions for 2020 and, if so, to accurately calculate the ERC.
Can I Apply for the Florida Credit for Retaining Employees?
As per Article 206 of the Tax Relief Act of 2020 for Taxpayers Surety and Catastrophe, firms that have been granted a Paycheck Protection Service Small Business Impairment Credit could potentially qualify for the ERC for retained employees.
In order to qualify for PPP debt forgiveness, a firm must have qualifying earnings that are not included as payroll expenses. If your salary is eligible for loan forgiveness under both the ERC and the PPP, you may only utilize it for one of the programs.
Due to the enactment of the Taxpayer Certainty and the Disaster Tax Relief Act of 2020, the Caution paragraph in the instructions for your payroll tax return, right below the instructions for the Non-returnable Portion of Retaining Employees Credit on Worksheet 1, is no longer applicable.
As with the second quarter, businesses that pay taxes quarterly must report all qualified wages and health insurance costs on IRS Form 941, the standard payroll tax return. In most cases, any overpayment on the employer's part of Social Security tax will be refunded after the credit has been applied.
Florida's Employee Retention Credit Requirements
The Employee Retention Credit (ERC) ensured businesses could continue operating during the epidemic. Since then, this new rule has been utilized by business owners as a means of retaining their existing workforce. If you operate a business and haven't gotten your refund yet, continue on.
Many business owners sought PPP Loans from the federal government at the onset of the epidemic. This forgiving loan helped struggling businesses retain their employees on the job. Many businesses might apply for and obtain this really helpful and necessary financing. When the CARES Act was first enacted, PPP loans and ERC could not be used together.
Due to a change in the rules, you are now eligible to take part in both programs. Most businesses can apply for and receive reimbursements of Employee Retention Credits. In order to qualify, a company must meet one of four criteria and have less than 100 workers in 2020 or 500 workers in 2021.
● There was a decline in sales volume compared to 2019 sales volume numbers.
● In order to contain the outbreak, the corporation had to shut down or reduce operations.
● Because of problems in the supply chain, your organization was unable to complete as much work as usual.
In Florida, who may claim the ERC retention credit?
Qualified earnings are divided by the average number of employees for the qualifying firm for the relevant calendar year. For purposes of the ERTC, "qualified wages" comprise that portion of group health plan costs that would otherwise be attributable to qualifying earnings
To be eligible, a business must be in operation in either 2020 or 2021 and meet one of the following requirements:
1. There has been a partial or complete shutdown of the company's commercial operations because of COVID-19 as a consequence of government restrictions prohibiting commerce, travel, and gatherings.
2. Quarters in 2021 can be qualified for based on a 20% decline in gross receipts from the previous quarter if the employer so chooses.
Imagine that in Q1 of 2019, you had revenue of $210,000, but only $100,000 in Q1 of 2021. Your business would pass the gross receipts criteria if Q1 2021 sales were equal to 48% of Q1 2019 sales.
Credit for Qualified Employee Retention in Florida
Business owners benefited in a number of ways from the CARES Act. One of the most significant benefits to the company is the Employee Retention Credit (ERC). The ERC is the Internal Revenue Service's reimbursement to businesses for wages paid to workers in 2020 and 2021
ERC is useful for businesses of all types and sizes. There will be room for thousands more businesses to meet the requirements. The ERC initiative will pay back participating businesses up to $5,000 for wages paid in 2020, and up to $21,000 for wages paid in 2021.
Which Florida Companies Can Claim the Employee Retention Credit in 2020, 2021, and 2022
Any for-profit or non-profit firm that conducts commercial activity in 2020 can claim the retained employee's credit.
Entire or partial shutdown of activities for any calendar quarter due to COVID-19-compliant prohibitions on commerce, travel, or group meetings from an appropriate government authority; or
There was a significant drop in yearly revenue during the calendar quarter.
● Changes were made to the prerequisites for the year 2021.
● In order to get the rebate, the business must suspend a substantial portion of its regular operations.
With regards to the credit for retaining employees, part of an employer’s business is regarded as beyond a small fraction of activities if the combined income from that particular aspect of the routine operational processes is at least 10 percent of the overall income. In another option, the amount of time of duty performed by employees within that department of the company is at least 10 percent of the entire amount of time of work given by the complete personnel in the general income.
In order for an employer to be deemed temporarily suspended, their business operations must have been restricted due to a government order at the federal, state, or local level that impacted their working hours.
A restaurant is considered to have partially discontinued business if, for example, it is forced to close due to a local government mandate but may still offer carry-out or delivery service.
If an order limits the number of hours a business may be open, or if some commercial activities were to be shut down and no work could be performed, the business may have to temporarily suspend parts of its normal operations.
Thomson Reuters has made updates to the Employee Retention Credit Tool in response to the challenges associated with assessing eligibility for the employee retention credit.
Services for Filing Employee Retention Credit with the Florida ERC
Employers must report the sum of a worker's qualifying earnings and the COVID-19 withholding credit for such worker on Form 941 for the month in question. The second period's industry credit was determined using the same method used in the first period, namely, keeping track of credit-eligible salaries on Form 941 for the quarter ending June 30, 2020.
The credit for the employer portion of social security taxes (6.2 percent rate) and railroad retirement tax may be applied to all profits and sums paid to all employees for the quarter. However, there are some modifications to the rules for 2021.
If the amount of the credit was higher than the amount the employer owed in federal employment taxes, the difference was considered an overpayment and given back to the business. An eligible employer may reduce its quarterly employment tax contributions by the anticipated credit amount if the credit is issued during the quarter.
The corporation is permitted to keep the employee's share of federal income tax withheld, as well as the employee's and employer's shares of social security and Medicare taxes.
Due to inadequate employment tax payments, an employer may request early payment of the anticipated credit amount by submitting Form 7200. There are new limitations in place for the year 2021; only small enterprises may apply for the loan.
If a company's quarterly payroll tax return from 2020 or 2021 does not include a claim for the employee retention credit, the company can file a corrected return for each quarter in which the credit is applicable.
What Is The Offset By The FL Employee Retention Credit?
In accordance with the CARES Legislation, the Employee Retention Tax Credit (ERTC) was enacted to provide an incentive for companies to retain their staff on board despite the epidemic.
The Comprehensive Appropriations Act (CAA), which became law in December 2020, made numerous major modifications to ERTC regulations.
Until recently, a company that has taken out a PPP loan was ineligible for ERTC.
The CAA, on the other hand, extended ERTC until June 30, 2021, increased the credit amount paid to each Employee, and expanded ERTC to include enterprises that have acquired a PPP loan.
For a business to qualify, it must either.
● Obtain a government order to close, resulting in the temporary or permanent cessation of operations.
● There has been a considerable drop in gross sales compared to last year.
If your business is negatively impacted by a government shutdown, you may be eligible for a credit related to employee retention. The company's regular activities, such as hours of operation, product options, and capacity, must be reduced as a result of the government order.
If a government agency gives directives that don't hurt your business in any way, it doesn't mean you have to stop doing business. In addition, a shutdown does not occur if economic activity is voluntarily halted without the instruction of an appropriate governing authority.
What Does a Significant Decline in Gross Receipts Mean?
The threshold of annual gross sales is not constant. All wages paid throughout the quarter may be ERTC eligible if you meet the gross receipts criterion. Until the quarter in which your gross receipts equal 80% of the corresponding quarter the year before, every quarter is a qualifying quarter.
How Much Money Do You Need to Make to Qualify?
It all comes down to your credentials. If you qualify for back pay because of a government shutdown, you can only count the money you made during the shutdown itself. If you qualify because of a drop in quarterly gross receipts, any and all salary payments made during that time period will count as qualifying earnings.
What Does Florida's Employee Retention Credit Do?
The ERC is available to any business that existed in 2020 or 2021, unlike PPP loans and other small business relief options. Since the ERC is not a loan, recipients will never have to pay it back or ask for forgiveness.
Additionally available through 31st December 2021, is the ERC. For qualified salaries received in 2020, each employer is entitled to collect up to $5,000 in credits per employee, and up to $7,000 in credits per Employee every quarter for qualifying wages paid in 2021. The total ERC of a single employer is uncapped.
In three ways, the ERC helps businesses that qualify for its services
● They can pay less in employment taxes than they normally would have to.
● They might apply for an "advance refund" of the credit anticipated for a certain quarter if they had 500 or fewer full-time employees on average in 2019.
Many business owners may benefit more from this tax credit than from the more publicized loans and grants included in the rescue measure.
How Can Your Florida Company Use the Credit for Retaining Employees?
The purpose of the ERC is to persuade employers to continue paying workers who are unable to report to work for the duration of the coronavirus epidemic. Here is all the information your company needs to fully take advantage of this new credit.
● Each qualified person you financially help between March 13, 2020, and December 31, 2020, can earn you a nonrefundable credit of up to $5,000. Furthermore, the recently introduced Employee Retention Credit (ERC) allows you to claim up to $14,000 for each qualifying employee you retain between January 1, 2021, and June 30, 2021.
● If your business was closed permanently or temporarily and your total revenues for the same month in 2019 were less than 50%, you qualify as an employer.
● The 2020 quarters may be substituted if you are not in business in 2019.
● You can immediately improve your credit by reducing the payroll taxes you owe to the IRS.
● The recent legislation, which will be enforced starting from March 27, 2020, allows companies that borrowed funds from the Paycheck Protection Program (PPP) to claim the ERC for suitable compensations that are not acknowledged as payroll costs to get the PPP debt eliminated.
Earnings could only be claimed for people who were not working if your average number of full-time employees in 2020 was higher than 100. Earnings can be claimed for all non-working employees if the number of workers is fewer than 100.
The limit was increased to 500 full-time employees in 2021, thus if you employ more than 500 people, you can only apply for the ERC for those who don't provide services. If your business employs 500 people or fewer, you can collect the ERC from every employee, whether they are working or not.
For all calendar quarters between March 13, 2020, and December 31, 2020, that qualify, the credit is equal to 50% of up to $10,000 in qualified salaries (including amounts paid towards insurance coverage). Over the length of the contract, each employee has the potential to earn a maximum of $5,000.
A qualifying period starts when total revenues are significantly below 50% compared to the same quarter in 2019 and ends when gross receipts exceed 80%.
You may use the credit to offset your portion of the owner's Social Security costs, and it's totally refundable. Your portion of the taxes will be deducted from the refund before it is sent to you, making the total amount due to you.
The following graph depicts your payroll costs for one full-time Employee in 2020, based on three applicable quarters. The only expense represented in the graph is FICA taxes because all other outlays remain the same.
Florida Employee Retention Credit: How to Calculate it?
In 2021, businesses will be eligible for an ERC of $7,000 per employee each quarter. Credits equal 70% of qualifying salary and qualified health plan costs are available to employees.
For One Employee in FL:
Let's pretend that in the first three months of 2021, one worker earns $10,000 in taxable income. As an employer, you would be eligible for a $7,000 rebate ($10,000 multiplied by 70%).
Healthcare expenses for one FL employee:
To illustrate, let's say that in a single quarter, you provide your single Employee with $5,000 in qualifying wages and $1,000 in eligible employee health insurance. To determine your maximum pension, double your pensionable earnings and employee health insurance by 70%.
Multiple FL Employees:
Imagine there are three employees. Before the deferral period begins, you pay two of your employees $10,000 in eligible compensation and the third Employee $20,000 in qualifying wages.
IRS Support for FL Employee Retention Credit
The Employee Retention Credit (ERC) provided Florida businesses with a tax credit that may be refunded in full. The CARES Act included this measure at the start of the pandemic
and served as an inducement for companies to continue paying their staff. You may learn more about how the ERC FAQ on the IRS website affects your Florida business by clicking here.
Brief Synopsis and Final Thoughts on Florida's ERTC Program
Most Florida small companies took a major financial blow from the coronavirus and are still recovering. Your Florida business is in luck since there are other financial options available to help mitigate the pandemic's consequences.
There aren't many ways to keep your Florida company going now that the SBA's Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) have ended. The ERC/ERTC tax credit program in Florida is a resource of great worth that is still accessible.