The Employee Retention Credit or ERC is a form of tax credit for employers. This form gives employers an incentive to have retained their employees by offering a refundable tax credit for each qualified employee who was not laid off and remained on payroll during the times of COVID. Although it’s a complicated credit, its refundable nature can help increase retention rates and make the incentive more enticing. You can Click here to learn more about ERC and its eligibility requirements.
Let us now look into the main reasons why nonprofit organizations should apply for Employee Retention Credit.
- Most nonprofit organizations will qualify
The main reason why nonprofit organizations should apply for the ERC is that most nonprofit organizations will qualify. Nearly all nonprofit organizations will essentially qualify for this credit.
- It’s refundable
The ERC is also a refundable tax credit. This is a great incentive to help employers who are affected by government-imposed restrictions in different ways. The ERC allows employers to offset the costs of keeping experienced employees on the payroll. This credit is thus a great tool for nonprofit organizations in different areas of employment, including human resources.
- It is retroactive
Since the ERC is a form of tax credit, it can be used retroactively. This means that the greater part of organizations will have the opportunity to get a refund on their taxes due based on their Employee Retention Credit. This is a great incentive to keep qualified employees on payroll and have them incentivized in the long term. As mentioned earlier, the Employee Retention Credit is a tax credit. This means that it directly reduces the amount of taxes that have to be paid by employers, compared to other forms of tax credits.
- It is a cash refund
The ERC is a refundable tax credit. Moreover, the fact that it is a refundable tax credit means that it grants employers a cash refund on their taxes. This makes the ERC a great incentive to retain experienced employees and incentivize them, as well.
- It is easier than you think
Many employers are not applying for ERC thinking it as a tedious process to get through. However, in fact, ERC is a fairly easy process. The ERC’s qualification requirements are not complicated and the online application process is straightforward, as well. This means that employers who are eligible for the ERC credit should apply for it as it can help them reduce their taxes. You can seek the help of an ERC specialist to help you through this process.
