Employee Retention Credit Strategies
On Sunday December 27, President Trump signed the Coronabus bill which officially authorizes the additional stimulus targeted to small businesses and craft breweries. In our last blog post, we discussed the major items in the bill that impacted craft breweries. In this issue, I wanted to focus in on a couple of the strategies related to PPP 2.0 and the Employee Retention Credit (ERC) and how to effectively handle these programs, assuming they pertain to your business.
Refresher on PPP and ERC
Strategy 1: Retroactive Application of the ERC for 2020
The first thing you want your brewery to do is to apply the ERC retroactively for the periods in which you did not use the PPP to cover payroll funds. In order to determine this, we first need to determine how much in non-payroll costs we had that were allowable for PPP forgiveness purposes. With the PPP, you could use up to 40% of the PPP loan on non payroll items like rent, utilities, and mortgage interest. This becomes important as we want to free up potential payroll from being included in forgiveness. Assuming we have enough non payroll costs to get us to that 40% threshold, that means we then need to determine when our payroll costs meet the 60% threshold.