Despite the support of numerous government programs, many businesses have been forced to furlough or lay off employees due to the economic uncertainty caused by the COVID-19 pandemic. Fortunately, the Coronavirus Aid, Relief, and Economic Security Act (CARES) included an employee retention credit to help offset some of these costs. Let’s examine how this ERC program works and what you need to know about it.
ERC Frequent Questions
1. What is employee retention credit, and how does it work
2. How can your business benefit from retaining employees
3. What are some tips for retaining employees
4. How to measure the success of employee retention
What is the Employee Retention Credit?
The Employee Retention Credit is a refundable payroll tax incentive created by the CARES Act and designed to help businesses keep their workers on staff during difficult economic times. To be eligible for this program, employers must experience either a full or partial suspension of operations due to governmental orders related to COVID-19 or experience a significant drop in gross receipts compared with the same quarter in 2019.
Who is Eligible?
The credit is available to all employers regardless of size or industry as long as they meet the abovementioned qualifications. However, companies that receive certain other forms of financial aid from the government are not eligible for this credit. This includes loans through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).
How Does It Work?
Under this program, employers are allowed up to a 50% refundable payroll tax credit on wages paid between March 13th and December 31st, 2020. The maximum amount of wages taken into consideration depends on whether you are claiming the total or partial credit based on the suspension of operations due to governmental orders related to COVID-19 or experiencing a significant drop in gross receipts compared with the same quarter in 2019. If your business meets one of those criteria, you may qualify for up to $5k per employee per quarter. Note that wages paid over $10k per employee per quarter do not qualify for this credit.
The Benefits of Retaining Employees in Your Business
Attracting and retaining talented employees is essential for the success of any business. Not only does it help to create a productive and engaged workplace, but it also helps to reduce turnover costs and maintain a consistent customer experience. So let’s examine how your business can benefit from retaining employees.
Reduce Turnover Costs
Retaining employees can significantly impact the cost associated with hiring new staff. Finding and hiring qualified candidates can be expensive, not to mention the time spent training new staff members. By investing in existing team members through professional development opportunities and competitive benefits, you will be able to reduce turnover costs while increasing loyalty among your staff.
Improve Quality of Work
Your team’s quality of work will benefit from having experienced employees who are familiar with company policies and procedures. This helps ensure that tasks are completed correctly and efficiently and creates an environment in which newer employees can learn from those who have been around longer. This knowledge sharing is invaluable for any business looking to remain competitive.
Retaining employees helps maintain consistency within the organization. When you have talented, experienced people on board, they are more likely to stay up-to-date on industry changes and technological advances that could affect how your business operates. This means that your customers will always receive high-quality service regardless of who interacts with them or what task they perform.
Reduce Turnover Cost
Retaining employees should be one of your top priorities when running a successful business. Not only does it save money by reducing turnover costs, but it also improves the quality of work and maintains consistency throughout the organization. In addition, investing in existing team members through professional development opportunities and competitive benefits will go a long way toward ensuring employee loyalty and satisfaction, ultimately resulting in tremendous success for your business.
How to Retain Your Top Talent
There are few things more important than keeping your best employees. Not only do they help you hit your goals, but they also show new hires what it looks like to be part of the team and culture. Fortunately, there are some tips you can use to ensure that your employees stay happy and engaged. Let’s take a look at some of these tips.
Developing a Positive Company Culture
One of the most critical ways to retain employees is by creating a positive company culture that fosters respect, collaboration, and open communication. In addition, a positive company culture should emphasize employee development and professional growth, provide ample opportunities for feedback and recognition, and establish clear expectations for everyone in the organization.
Creating an environment where employees feel valued and respected will make them want to stay with your business for the long term. Furthermore, make sure that everyone on your team is aware of the company’s mission statement so that everyone is working together towards a common goal.
Compensation & Benefits Package
Another major factor in employee retention is compensation and benefits packages. It’s vital to offer competitive salaries and additional benefits like health insurance, vacation time, 401(k) plans, etc… Most importantly, make sure that you treat all of your employees fairly when it comes to salaries and benefits packages; don’t offer different salaries or packages based on individual performance or personal characteristics such as age or gender. Doing so can lead to employee resentment, which could ultimately hurt retention efforts.
Provide Opportunities for Growth & Development
Finally, providing opportunities for growth and development is critical when retaining top talent. This could include offering training programs or allowing employees to attend conferences or classes related to their field of work. Additionally, it would be best if you considered offering flexible schedules so that employees can have more control over their workday and better balance their home life with their job responsibilities. Finally, allowing employees the freedom to pursue their interests within the realm of their job will help create a sense of ownership over their work, leading to higher engagement and retention levels in the workplace!
Creating an environment where employees feel valued is key to retaining top talent in any organization. Offering competitive compensation packages along with benefits such as health insurance can go a long way towards helping businesses maintain valuable staff members while also providing opportunities for growth and development, allows foster feelings of ownership over one’s work which increases overall engagement in the workplace—all leading to improved employee retention rates! Implementing these strategies will ensure that businesses keep their top talent happy and engaged no matter what challenges may arise down the line!
How to Measure Employee Retention Success
Employee retention is a crucial indicator of the success and sustainability of any business. Knowing how to measure employee retention can help employers better understand their workforce, increase productivity, and improve the overall culture within their organization. There are several ways in which employers can measure the success of their employee retention efforts.
Calculate Retention Rates
Employers should calculate their retention rate by tracking how many employees stay with the company over a certain period. This is done by dividing the number of employees who stayed for the entire period by the total number of employees at the start of that period. To get an accurate picture, tracking employee retention over multiple periods (e.g., one year, five years) is best. This will allow employers to understand if they have a long-term problem or a short-term issue with retaining staff.
Analyze Interview and Onboarding Data
Employers should also analyze interview and onboarding data to gain insight into factors influencing employee retention decisions. By understanding why potential hires decide not to accept offers and why new hires choose to leave after only a few months, employers can assess what changes need to be made to improve employee retention rates in the future.
Monitor Employee Satisfaction Surveys
Finally, employers should monitor employee satisfaction surveys regularly. These surveys give employers valuable feedback on topics such as job satisfaction, work/life balance, job security, career development opportunities, etc.—all critical indicators of employee engagement and retention. Employers should take this feedback seriously to identify areas where improvements can be made to increase employee satisfaction and reduce turnover rates.
Retention Rate Over Multiple Periods
Measuring success regarding employee retention is essential for ensuring your business runs smoothly and efficiently over time. By tracking your company’s retention rate over multiple periods, analyzing interview and onboarding data, and monitoring employee satisfaction surveys regularly, you can gain invaluable insights that will help you make more informed decisions about hiring practices as well as potential improvements that may lead to increased levels of engagement from your staff members. In addition, with this information in hand, you’ll be able to create an environment where employees feel valued and appreciated—an essential ingredient for successful long-term growth!
In these uncertain times, it can be difficult for businesses to make ends meet while still providing competitive salaries and benefits packages for their employees. Fortunately, there is help available through programs like The Employee Retention Credit, which can provide much-needed relief during difficult financial periods. If your business has been affected by COVID-19, it’s worth considering whether you’re eligible for this program to maximize your savings while keeping your workforce intact during these unpredictable times.
See Erik’s Review Blog On The Employee Retention Credit Review (click here)
Common ERC Objections
With changes often and over 14,000 mandates, this isn’t something you want to put in the hands of just anyone, William.
When it comes to the ERC Program, you must work with a firm dedicated to ERC, and Heritage Consulting is 100% focused on properly guiding those who are eligible or would like to determine their eligibility. You work with an Expert CPA.
Too often, business owners, churches, and non-profits are:
- Not aware of the Employee Retention Credit (ERC) and its benefits.
- Believe that their business is not eligible for the ERC.
- I don’t know how to calculate the credit.
- Not familiar with the documentation and record-keeping requirements for the ERC.
- Concerned about the additional paperwork and compliance requirements.
- Worried about potential audits or penalties.
- Filing for the ERC is too complex or time-consuming.
- Unsure how the ERC credit will impact their overall taxes and financial situation.
- Worried that they missed the deadline to file for the ERC.
- Not aware of the potential impact of the ERC on their employees.
- We’re told in the past; they did not qualify.
- NOT a loan (it is a refund).
Know the facts! Visit www.erc-facts.org to learn more and to schedule a time to speak with the CPA directly if you’d like.
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