Businesses in California Can Qualify for Up to $26,000 Per Employee through the ERC Tax Credit
The Employee Retention Credit (ERC) is a refundable tax credit against employment taxes that businesses and organizations paid over the last three quarters of 2020 and the first three quarters of 2021. A maximum of $26,000 per employee is available and 99 percent of businesses in California can qualify for cash through the program. Many companies still have not filed for their ERC. It is not too late: California businesses can still file for the ERC for 2020 and 2021 in 2022.
At Sunrise Business Solutions | ERC Guaranteed, our California ERC specialists know what companies have to do to legally qualify for ERC. We go above and beyond to help clients maximize their ERC tax credit for all six quarters. If you have any questions or concerns about claiming ERC for California businesses, we are here as a resource. Our team can help you qualify in as little as 60 seconds. We will prepare all your paperwork and calculations, and provide you with copies of these documents. Contact our Employee Retention Credit professionals today to learn more about how we can help.
What is the Employee Retention Credit (ERC)?
In March of 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. The CARES Act was the federal government’s initial economic response to the fallout caused by the COVID-19 pandemic and the corresponding public health restrictions.
The Employee Retention Credit (ERC) is a critically important—but somewhat unknown—provision in the CARES Act. The ERC reimburses eligible businesses in California and other states for employment taxes paid during three quarters in both 2020 and 2021. The ERC in California can be significant: Up to $26,000 in refundable credits are available per employee.
Is the Employee Retention Credit Taxable in California?
The Employee Retention Credit (ERC) is a cash payment made to qualifying businesses and organizations. You may be wondering: Does my company have to report the ERC as taxable income? The short answer is ‘no.’ While it is a reasonable concern, the Internal Revenue Service (IRS) has already issued official guidance on this matter. IRS Notice 2021-20 states clearly that:
- “An employer receiving a tax credit for qualified wages, including allocable qualified health plan expenses, does not include the credit in gross income for federal income tax purposes.”
In other words, the ERC is not taxable income for the purposes of federal law. California businesses also do not get taxed at the state level for their federal ERC payment. To summarize, the Employee Retention Credit (ERC) is not taxable in California.
How Do California Businesses Claim the Employee Retention Credit?
To claim the ERC in California, a business or organization must meet the federal eligibility requirements. A California business can qualify for the ERC by meeting one or more of the following standards in a specific quarter in 2020 or 2021:
- The business was fully or partially shut down due to a governmental order during any point during that quarter; or
- The business sustained a significant decline in gross receipts—at least 20 percent in 2021—when compared to 2019.
To be clear, California businesses only need to meet one of these standards. A 20 percent loss of revenue is sufficient to qualify, but it is not an ERC qualification requirement. You may be wondering about how California businesses file for ERC. Sunrise Business Solutions | ERC Guaranteed can help you do so through your Form 941. The law allows businesses to submit an amended Form 941 for both 2020 and 2021 to claim the ERC.
Virtually Every Business in California Can Qualify for the ERC By Way of a Partial Suspension
It is important to emphasize what a “partial” shutdown or suspension of operations means for the purposes of the Employee Retention Credit (ERC). This is the most straightforward way for most businesses in California to qualify for the tax credit. Examples of government orders that constitute partial suspensions that can qualify a business for the ERC include:
- Cleaning and sanitizing requirements;
- Social distancing rules; and
- Capacity restrictions.
Sunrise Business Solutions | ERC Guaranteed helps clients put together the documentation that they need to prove that they qualify. Throughout 2020 and 2021, California consistently had some of the strictest state and local COVID-19 restrictions in the country. Nearly every business in California can qualify for the Employee Retention Credit.
Who Can Claim the ERC in California?
The ERC is not limited to any particular industry. We help companies across all industries claim ERC in California. No matter the nature or scope of your company, there are options available for claiming ERC for California businesses that qualify. Here is a non-exhaustive list of businesses that can claim the Employee Retention Credit in California:
- Healthcare: Many healthcare industry businesses were disrupted by the COVID-19 pandemic. Some examples of businesses and medical practices that should apply for the ERC include dentists, chiropractors, and all therapists. Cleaning and sanitizing requirements, social distancing rules, capacity restrictions, and supply chain disruptions had a huge impact on the healthcare industry in California.
- Educational Institutions: Educational institutions, including nonprofits entities, can file for the ERC. Daycare centers and other child care facilities were especially affected by COVID-19-related requirements.
- Transportation Services: All types of transportation services companies can file for ERC tax credits. Some of the types of transportation companies that our California ERC specialists frequently help qualify include trucking companies, moving companies, and medical transportation companies.
- All Retail Stores: Every brick-and-mortar retail business in California was subject to government orders during COVID-19, including cleaning & sanitizing requirements and capacity restrictions. Many companies in retail saw serious challenges. Retail stores can file for the Employee Retention Credit.
- Restaurants and Fast Food Businesses: Throughout 2020 and 2021, restaurants and fast food businesses in California were subject to a wide array of government orders, including capacity restrictions and cleaning & sanitizing rules. These orders allow virtually every restaurant in California to qualify for the ERC.
- Personal Care Businesses: Personal care businesses in California were heavily affected by state and local government orders that limited the flow of commerce. Some notable examples of businesses in personal care that our California ERC specialists frequently help qualify for the Employee Retention Credit include salons, spas, fitness centers, and gyms.
- Manufacturing Industry: Any company operating in the manufacturing industry that was subject to a government restriction—from cleaning and sanitizing standards to supply chain disruptions—can file for the ERC in California.
- Construction Industry: ERC tax credits are available for companies in the construction industry. A construction company in California that was subject to additional cleaning and sanitizing requirements can file for the Employee Retention Credit for 2020 and 2021.
Why Trust Sunrise Business Solutions | ERC Guaranteed for Help With the ERC in California
The Employee Retention Credit (ERC) is a unique program that provides a path to generous financial support to businesses in California and other states that stayed open during the COVID-19 pandemic. At Sunrise Business Solutions | ERC Guaranteed, we focus exclusively on the ERC. Our team is dedicated solely to helping businesses navigate the complexities of the Employee Retention Credit application process. It is our mission to make sure that you have the knowledge and resources to maximize the cash you receive. With our team, you will get access to a California ERC tax credit specialist who:
- Provides a Risk-Free, Comprehensive Analysis: Do you want to know how much your California business can qualify for through the ERC? At Sunrise Business Solutions | ERC Guaranteed, we offer a risk-free, comprehensive ERC analysis to all businesses, entrepreneurs, and organizations in California. Our team of ERC experts will thoroughly review your eligibility. You do not pay a dime unless you qualify for the Employee Retention Credit.
- Carefully Calculates Your Benefits (All 6 Quarters): With a commitment to providing lower fees to clients, we will use our proprietary system to calculate your Employee Retention Credit eligibility for each of the six quarters. Sunrise Business Solutions | ERC Guaranteed helps businesses in California get the maximum total benefit for every quarter. Up to $26,000 per employee may be available as an ERC credit. Do not leave this money on the table.
- Handles the Application Process: Filing for a tax credit can be complicated—especially if you have already submitted your business return for 2020 and/or 2021. The good news is that it is not too late to qualify for the ERC. The employee retention credit specialists at Sunrise Business Solutions | ERC Guaranteed are prepared to handle every aspect of the application. You simply need to provide some basic financial information and documentation.
- Facilitates Your Payment(s) (Get Up to 6 Checks from the Government): Unlike with the Paycheck Protection Program (PPP), the money paid out through the ERC is unrestricted. A business does not have to use it on payroll. You can use your ERC funds however you please—from investing in your company to recoup your personal expenses during the COVID-19 pandemic. Sunrise Business Solutions | ERC Guaranteed facilitates payments for every quarter a business is eligible. You can get up to six checks.
We have Employee Retention Credit tax specialists who are well-positioned to work with businesses and organizations throughout the entire State of California, including in Los Angeles County, San Diego County, Orange County, Riverside County, San Bernardino County, Santa Clara County, Alameda County, Sacramento County, Contra Costa County, Fresno County San Francisco County, Los Angeles, San Diego, San Jose, San Francisco, Fresno, Long Beach, Oakland, Bakersfield, Stockton, Sacramento, Irvine, Chula Vista, Oxnard, Glendale, Santa Clarita, and Huntington Beach.
Contact Our California ERC Tax Credit Specialists Today
At Sunrise Business Solutions | ERC Guaranteed, we are committed to providing top quality guidance and support to businesses throughout California. Our team helps businesses get the greatest possible ERC tax credit for all six quarters. If you are ready to get cash for your business through the ERC, professional support is available. Give us a call at 888-210-8870 to get immediate help from a California ERC specialist.