Have you recently noticed that you’ve been losing revenues due to staff turnover? If so, then you’re definitely not alone.
In fact, an average of 4.3 million U.S. employees have quit their jobs per month. In other words, your needs as a business owner have to change. You need to learn about employee retention credits now to hold on to your team.
What exactly do these credits entail? Why do you need them? To learn the answers to these questions and more, keep reading.
Table of Contents
1. How Employee Retention Credits Work
Employee Retention credits (ERCs) are refundable tax credits designed to encourage businesses to keep employees on their payroll, even if they are not working.
The refundable tax credit is equal to 50% of the wages paid to each employee, up to $10,000 per employee, for a maximum credit of $5,000 per employee. The credit can be applied to payroll taxes or unemployment insurance.
2. What Companies Are Eligible for ERCs
The Employee Retention Credit is for eligible employers that retain their employees during the COVID-19 pandemic.
The credit is available to employers with operations that were fully or partially suspended as a result of a government order related to COVID-19, or that experienced a significant decline in gross receipts.
To be eligible, employers must have fewer than 500 employees. The credit is available for wages paid between March 13, 2020, and December 31, 2020.
To claim the credit, you must maintain your employee headcount and salary levels compared to the previous year, and you must also agree to not terminate any employees or reduce their hours.
If you do reduce any employee salaries, you may still be eligible for partial credit.
3. How These Credits Can Improve Your Business
There are a few things businesses should know about employee retention tax credits in order to improve their business. These include:
ERCs Can Attract and Retain Top Talent
To retain top talent, businesses need to offer more than just a competitive salary and benefits package. They need to offer a workplace that is supportive and innovative.
These employee retention ideas can improve your business by attracting and retaining top talent.
By offering an employee retention credit, you can show your employees that you value their contributions and are committed to their continued success. When it comes to employee retention, ERCs are a win-win for businesses and employees alike.
Offset the Costs of Training and Development Programs
ERCs can help you offset the costs of training and development of employee onboarding programs. ERCs can help make your training and development programs more affordable and spend your money on welcome kits instead.
By providing kits like the Axomo welcome kits, you can demonstrate your appreciation and help your employees feel more comfortable and settled in their new roles.
Improve Morale and Productivity
ERCs can improve morale and productivity within your organization. Studies have shown that employees who feel valued and appreciated are more likely to be productive and stay with their company.
Make the Most of Employee Retention Credits
Employee retention credits are a great way to keep your employees happy and motivated.
Employers should consult with their tax advisor to see if they are eligible for the credit and to learn more about how the credit works. Be sure to keep these things in mind when considering them for your business.
Take a look through the rest of our blog for more helpful tips!