8 Ways You Can Use Employee Retention Credit (ERC) Refunds
8 Ways You Can Use Employee Retention Credit (ERC) Refunds
COVID-19 landed a profound punch, disrupting the operations of many businesses globally. To assist employers in keeping their workforce amidst this crisis, the US government implemented the Employee Retention Credit (ERC). This refundable tax credit’s primary aim is to incentivize companies to hold on to their employees, even in the face of economic distress caused by the pandemic.
The question of how to best use the cash flow provided by ERC refunds, or even how you are able to use your employee retention credit, might be on your mind. Here are the best ways to utilize your ERC refunds, along with tips on estimating your ERC refund via a free ERC calculator & sound advice from ERC attorneys with 7,500+ successful ERC applications for your ERC application.
First, Compute Your Employee Retention Credit
Before strategizing the use of your ERC refunds, it’s important to evaluate the amount you might receive. An ERC calculator can help gauge the tax credit your company is possibly eligible for. Be aware that in 2023 ERC laws & regulations have seen modifications post their inception, hence the need to use an updatedERC calculator that adjusts for these alterations. It’s always a good idea to work with an ERC Lawyer as well.
a. Qualification Factors
Your enterprise qualifies for the ERC if it has been affected one or more of the following due to the pandemic:
- Enforced cessation or partial halt due to governmental orders
- Supply chain disruptions
- Hindered work capacity or job performance due to restrictions
- Missed project timelines leading to revenue loss
- Staff limitations on the count of individuals permitted in the premises
b. Estimating the ERC Value
An ERC calculator would require you to input specific company-related details such as the count of employees, wages during the qualifying period, & the size of business interruption due to COVID-19. Based on this data, the calculator will project the ERC sum your business may qualify for. You can also work with an ERC Specialist or ERC Attorney to ensure proper calculation.
How to use your Employee Retention Credit
- Reward Your Workforce
Your staff have possibly dealt with hurdles during the pandemic. Allocating your ERC refunds to reward them via cash bonuses or 401(k) contributions demonstrates recognition for their relentless efforts & loyalty. This initiative can uplift company morale, make employees feel treasured, & minimize staff leaving the company.
Fortify Your Employee Benefits Scheme
A strong employee benefits scheme can elevate employee retention & attracts new employees to your business:
- Expanded paid time off
- Child care advantages
- Gym memberships
- Augmented medical, disability, & life insurance plans
Plough into Equipment & Infrastructure
Use your ERC refunds to invest in new equipment & infrastructure, enhancing business operations. Some of our clients have upgraded machinery, enhanced their software systems, or invested in energy-conserving equipment to reduce long-term expenses.
Grow Your Company through Property or Acquisition
Your ERC refunds could provide the cash to expand your enterprise by purchasing fresh real estate or acquiring another company. Growing your enterprise via real estate or acquisition can enlarge your market presence & initiate new revenue channels, preparing your company for enduring success.
Lessen Debt & Amplify Financial Robustness
Clearing company debt with your ERC refunds is one of the best uses that we suggest. Nevertheless, it’s important to always assess your company’s strategy & model before choosing to clear debt, as maintaining certain debt levels might be beneficial in some scenarios.
Establish Cash Reserves for Unforeseen Circumstances
Who knows when the next pandemic is? Reserving a part of your ERC refunds for an emergency fund can provide a financial cushion for your business. Having cash reserves can enable you to withstand unexpected occurrences, such as economic downturns or natural disasters, without threatening your business operations.
Roll out New Product Offerings
Investing your ERC refunds in launching new products or services can bring in additional revenue and spark growth. This could be recruiting talented staff, purchasing equipment, or initiating marketing to spotlight your new offerings.
How to Get Your Employee Retention Credit and Use Your ERC Refund Properly
If you need help with the application process or just want to ensure you (1) fill out the application correctly; and (2) you get the max amount you are eligible for, schedule a live call with us here or call us now at 239-376-3428 . We at Biz Head Law have helped 7,500+ clients with the entire process.
Schedule Your Free Consultation Now
With the help of the tax attorneys at Biz Head Law, businesses can quickly determine if they are qualified for this powerful incentive. In just 10 minutes or less, they are also provided with an estimate, which can be up to $7,000 per quarter for each of the first three quarters of 2021 and up to $5,000 for 2020 for a total of $26,000 per full-time W2 employee under the CARES Act.
Calulate Your ERC Amount Now
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