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May 1st, 2023The Employee Retention Tax Credit (ERTC) is a government program that rewards businesses that kept employees on payroll during the pandemic. Business owners may collect up to $26,000 per W-2 employee if they retained employees during COVID-19 despite losing revenue or being affected by governmental mandates. Many people mistake the ERTC for a loan. But the ERTC is actually a tax refund that business owners never have to repay, leaving them with a significant chunk of change. It can be a lot of pressure to make sure you use this tax credit to its full potential. Continue reading to learn a few of the best ways to spend your ERTC refund.
When starting or running a business, it is easy to rack up debt. Sometimes it’s a necessary evil for businesses to accumulate debt. For example, a company may take out a loan to fund startup costs, purchase inventory or equipment, or expand operations. Or they may also use credit cards to pay for expenses or manage cash flow during slower periods. Whatever the reason, these debts can quickly add up, becoming a significant burden for businesses.
One smart way for businesses to spend their ERTC refund is to pay off debt. Using your ERTC refund to pay it off can help reduce monthly expenses, freeing up cash flow for other needs. By paying off debt with your ERTC refund, businesses can improve their financial standing, reduce stress, and position themselves for long-term success.
A creative way to spend your ERTC refund is to invest in marketing. Marketing efforts can sometimes prove costly, but they can help businesses grow if done correctly. Effective marketing can attract new customers, increase sales, and boost brand reputation. Business owners can put their ERTC money toward social media advertising or email campaigns to reach potential customers directly. Also, businesses can offer value to their audience and build authority on their website by using their ERTC refund to generate blog posts or videos.
Equipment is a universal essential across all types of businesses. Whether it be heavy machinery in a construction or landscaping business or technology like computers and printers, all industries deal in some form of equipment.
To ensure operations run smoothly, safely, and efficiently, business owners can spend their ERTC refund on upgrading equipment. Investing in new technology or equipment can help your company increase productivity, reduce downtime, and improve the quality of your products or services. Purchasing new equipment can drain businesses of thousands of dollars, but thanks to the ERTC, they won’t have to draw on their own funds.
As the public health emergency for COVID-19 draws to a close, many businesses have begun to regain their pre-pandemic momentum. As companies expand, they require more staff to keep up with demands or to fill roles lacking in the business. Hiring additional staff is an excellent way to spend your ERTC refund.
With more employees, business owners can increase productivity, take on new projects, and enhance customer satisfaction. You have the option to utilize your ERTC refund towards advertising for new job positions, covering onboarding expenses, or paying wages.
Despite the challenges of COVID-19, many employees stood by their employers and worked diligently to help companies stay afloat. Bonuses and benefits programs are a great way to recognize your employees’ hard work and dedication while uplifting morale, increasing motivation, and retaining valuable employees. In fact, a 2017 study noted that 88% of employees agree that it’s important that employers reward employees for great work.
Parceling your ERTC refund into bonuses for your employees acts as a sign of appreciation and can strengthen your relationship with them. Not only can bonuses benefit your employees, but bonuses can advance your business by attracting or retaining top talent and fostering better performance among current employees.
Expanding products or services is a strategic way to spend your ERTC refund. With the extra cash from the ERTC, you can launch a new product or service that can push you into new markets, differentiate your business from competitors, and help your company evolve and stay relevant.
Creating a new product or service typically requires major upfront cash, making the ERTC refund the perfect opportunity to generate new revenue streams. When rolling out a new idea, business owners can spend the ERTC refund on market research, advertising, and development to increase their chances of success with a new product or service.
If the COVID-19 pandemic taught business owners anything, it’s the fragility of our economy. Businesses can use this time to reflect on how to better prepare for economic downturns. By saving their refund, business owners can safeguard their operations from future disasters. Stashing away your ERTC refund can provide a lifesaving financial cushion for unforeseen events. Business owners can take the savvy route and reinforce their emergency funds using their ERTC refund.
Overall, businesses eligible for the Employee Retention Tax Credit (ERTC) can spend their ERTC refund in several ways to advance their operations and growth. From paying off debt and investing in marketing to upgrading equipment and expanding products or services, business owners can reinvest their ERTC refund into their company to enhance profitability in the long run.
At The Lake Law Firm, we help eligible businesses maximize their refund. Our experienced attorneys and accountants make applying for the ERTC easy and safe. Whether you need assistance with ERTC eligibility, filling out complicated IRS tax forms, or audit defense, The Lake Law Firm is here to help. Contact us today for a quick and painless, complimentary ERTC evaluation at (888) 525-3529.
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