This guide will have everything you need to know about how to claim the Employee Retention Credit in Ohio.
Did you operate a business in Ohio with employees or contractors during the tumultuous years of COVID-19 and the global pandemic?
If so, it’s possible that you qualify for tens of thousands of dollars back from the government under what’s known as the Employee Retention Credit.
No, this isn’t a scam! The Employee Retention Credit is one of the most lucrative pandemic relief options for business owners and it’s still available as of this blog publication (December 2022). You can read the nitty-gritty details here.
In this blog, we’re going to walk you through everything you need to know about claiming the Employee Retention Credit in Ohio for business owners.
Want to skip straight to the point and see if you qualify? You can get in touch with our accountants by getting started here and we’ll get in touch with you within 24 hours.
Let’s dive in!
What the Heck Is the Employee Retention Credit?
If you’re like many of our clients, you’re probably wondering what the heck the Employee Retention credit even is.
In short, The Employee Retention Credit is a refundable tax credit from the IRS against certain payroll taxes in 2020 and 2021.
Similar to the well-known Paycheck Protection Program (PPP), it’s essentially more stimulus for your business to help you navigate the consequences of COVID-19.
Honestly, the Employee Retention Credit is one of the best relief programs yet because you don’t have to pay back the money – it’s yours to keep.
What are the Rules for the Employee Retention Credit in Ohio?
The IRS made a change to the Employee Retention Credit program in late 2020 to state that you can retroactively claim the ERC all the way back to March of 2020 AND claim it in combination with the PPP funds you’ve likely already received.
The only stipulation to the change is that any payroll wages paid with the PPP funds are not eligible for the tax credit.
So, while the calculations that go into determining the difference between the two can be lengthy, the results are worth it.
Clients have saved up to $300,000 in cash from the Employee Retention Credit. And they don’t have to pay it back!
As long as you meet a few easy requirements, your business in Ohio could benefit from the same.
Qualifications to Claim the Employee Retention Credit in Ohio
The criteria to qualify for the Employee Retention Credit in Ohio is the same as it is for any business owner in the United States, as it’s a Federal government program.
However, in certain instances, your business may automatically qualify depending on your local city and county regulations.
Here is a simplified version of the qualifications (note, it’s best to speak with your qualified business accountant to ensure you qualify.)
- Your business must have been established before February 2020.
- Your business must have less than 500 employees.
- You must have at least one employee
Those are the easy ones. Unfortunately, if your business is brand, brand new and you don’t have any employees, the ERC isn’t for you.
Now let’s tackle the remaining qualifiers.
If ANY of the following points apply to your business, you qualify for ERC.
- You were forced to reduce capacity, reduce hours, or shut down at any point in 2020 or 2021 due to city, county, or state regulations.
- You made 20% less revenue in Q1 2021 than you did in Q1 2019.
- You are expecting to make 20% less revenue in Q2, Q3, or Q4 of 2021 than you did in the corresponding quarter in 2021.
- You made 50% less revenue in a specific quarter in 2020 than you did in the same quarter in 2019.
Many of the businesses we’ve helped had to shut down or reduce capacity at some point during 2020 or 2021 and indeed qualify for the Employee Retention Credit in Ohio!
How Much Cash Can You Get Back From The Employee Retention Credit?
To oversimplify the calculations: your business is eligible for up to $5,000 per employee for the entire year of 2020, and up to $28,000 per employee for 2021, if qualified.
The amount of tax credit you actually receive will take into consideration any PPP funds you took, the number of quarters you saw reduced revenue, and your specific city, county, and state regulations regarding COVID restrictions.
You will need to work with an experienced Ohio accountant to do the calculations for you. Once the calculations are complete, your accountant will then need to retroactively amend your payroll tax returns for the qualifying periods.
After which, the IRS will send back your cash!
How Can You Get Help Claiming the Employee Retention Credit in Ohio?
The first step is to reach out to your trusted business accountant.
If you don’t have an Ohio-based business accountant you’re happy with, you can get the ball rolling with our firm by simply filling in a few fun questions here.
To begin the Employee Retention Credit process, we will ask you for a few documents (like revenue statements and payroll reports) and we will get to work calculating exactly how much money you could receive back.
After the calculations are finished, we will then begin amending your payroll taxes for the qualifying periods in order to start the process for your refund.
Are there Employee Retention Credit funds still available in 2023?
Yes! As of this blog’s publication, funds are still available for the Employee Retention Credit as we head into 2023. However, you’ll need to act quickly to ensure you submit your claim before funds finally run out.
Have any questions we didn’t answer?
You can reach out to us with your questions anytime by filling in a few questions here.
Until next time!