2. Employee Retention Credit
If you have continued to pay wages to employees even through your business income declined significantly compared to last year, you may be eligible for the Employee Retention Credit. You qualify if your business was fully or partially suspended by the government due to COVID-19 during a calendar quarter, or if your gross receipts are below 50% of what you earned in a comparable quarter last year. The credit equals 50% of qualifying wages paid up to $10,000 per employee, beginning for wages paid after March 12, 2020 and before Jan. 1, 2021. Be sure to consult with your tax adviser to find out if you qualify.
3. Social Security Tax Deferral
If cash flow is an issue, you can defer deposits of the employer’s share of Social Security payroll taxes or, if you are self-employed, a portion of self-employment taxes. Deferred tax payments apply to payroll effective March 27 and ending Dec. 31. Deposit of the 6.2% employer share of Social Security tax due can be deferred. Half of the deferred tax payments will be due on Dec. 31, 2021, with the remaining half due Dec. 31, 2022. Be sure to consult with your tax adviser.
Take time to assess where you stand.
Government programs can only go so far in helping to keep your business viable. Carefully assess factors such as your available resources, access to lines of credit through your lending institution, and ways to adjust your business for the environment that likely lies ahead.