Employee Retention Credit in QuickBooks During COVID-19

If you are a QuickBooks user and not able to find any way to pay employee, when your business is close due to the COVID-19 pandemic? Don’t worry about this because you are using QuickBooks, the all-in-one solution to all accounting problems. Here we have the way, by which you can pay your employees easily, and i.e employee retention credit in QuickBooks. In this article, you can get the idea to set up, and to track the process of the ERC. But if you are new to ERC then let’s start with a little overview of employee retention credit.

The employment retention credit is the return of money against certain employment taxes equal to 50% of the qualified wage-earners and the suitable employer pays to employees after 12th march 2020, and before 1st January 2021. A worthy employer may be able to offset the effect of COVID-19 with an employer retention credit. It is not sufficient to cover the credit if the employer’s employment tax deposit.

Why Retention Employee Credit is Important

They give options by paychecks protection program loans and other small businesses. It is eligible for the ERC of suitable businesses of all sizes when they are in operation during calendar 2020 or 2021 years. The recipients are not to refund the money for ERC funds because it is not a loan. It is available through 31st Dec 2021 when the qualified wages paid for 2020 then the employer can claim max to max $5,000 of credits per employee and in 2021 they claim max to max $7,000 of credits per employee for the quarter. Honestly, there is no lie on the total amount of ERC available for a single employer.

Process to Set Up & Track Employee Retention Credit in QuickBooks

Make Sure You Qualify for the Credit

Before setup for ERC in payroll, Firstly you ensure that you qualify for the credit or not. When you want to take this credit check that the workforce size, the business structure, and reasons for business may close all effect.

Setting up your Payroll to Accept and Track the Credit

When you finished that you are eligible to accept the credit, then you set up the payroll to accept and track the credit. You set up for each of these items like employment retention tax credit covers regular time, overtime, and health care company contribution.

So, for this you only have to do is set the payroll and then run it. If you want to add the employment retention tax credit to prior tax or correct paychecks then you have to follow these two steps which are mentioned below:- 

  • Enhanced QuickBooks Payroll:- In QuickBooks Desktop you can change the corrections by yourself.
  • To change any corrections to the other products contact us.

After that choose your Payroll Services which you already have and get started which are given below:-

  • QuickBooks Online Payroll and QuickBooks Online Payroll full services
  • Intuit Online Payroll 
  • Intuit Payroll full Service
  • QuickBooks Desktop Payroll

You can choose any one of the QuickBooks Payroll service option for the ERC.

To Qualify for the ERC as an Employer

If you want to qualify for the ERC as an employer who must carry on a trade or business of calendar 2020 or 2021 year then follow these two requirements which are given below:-

  1. From COVID-19, in order to governmental authority limiting commerce the operation of the employer’s business is partial or full suspended.
  2. From experience of the employer’s business is declined quarterly in gross receipts:- 
  • It must decline more than 50% in gross receipts for which ERC is claimed each calendar quarter of 2020.
  • It must decline more than 20% in gross receipts for which ERC is claimed each calendar quarter of 2021.
  • When you looking back to 20% in gross receipts then an employer can also qualify for quarters during 2021.

Define Qualified Wages

It is determining a suitable calendar year that depends on the average number of full-time employers the worthy employer had during the year.

  1. Qualified Wages for Larger Employers:- For determining qualified wages it depends on the size of the employer by using ERC different rules.
  2. Qualified Wages for Smaller Employers:- It paid those employers during the period of the qualifying hardship, not for those who related to employees and not working due to qualifying hardship.
  3. Wages that do not Qualify for the ERC:- Those families which act for the first COVID-19 response are not allowed for the ERC and which an employer takes into account to determine tax credits under this.

Steps to Calculate ERC

If you want to calculate the ERC then the potential tax credit of your’s an estimate. But you have to know about some things which are given below:- 

  • Inappropriate calendar year the number of workers you have employed.
  • Each calendar quarter in 2019 there is revenue of your business.
  • When it is suitable the revenue of your business is for the relevant calendar 2020 or 2021.
  • It is paid to all employees by the total qualified wages.

Claim the ERC in QuickBooks

When you want to claim the ERC then you need to follow these three ways which are given below:-

  • They can deduce the deposit tax of the employment otherwise they need to make it.
  • The credit that is excepted for a provide quarter when they had an average of 500 or some full-time employees in 2019 then they can claim for an “advance refund” of the credit
  • By reducing tax deposits they claim their quarterly federal employment tax return and request a refund of any credit also.

We hope you like the article. At last, we just want to say that employee retention credit plays an important role for all employees, so if you are using QuickBooks then take the advantage of employee retention credit in QuickBooks. If you need more information regarding this topic then you can get our QuickBooks support through our QuickBooks expert for an effective solution to your doubt.

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