Leading You Toward Optimized Tax Incentives
At StenTam, we offer the expertise to navigate the complexities of tax credits in the fitness industry. Allow us to pave the way for you to claim the tax credits you rightfully deserve and accompany you on this journey of financial optimization.
Trends in consumer spending within the fitness industry are constantly evolving, much like they do in retail. Fitness centers and related businesses must stay ahead of these trends, which involves detailed planning in areas such as sales forecasting, class and service diversity, understanding different client segments, and efficient resource management.
Like many sectors, the fitness industry was dramatically impacted by the COVID-19 pandemic. While some industries, such as e-commerce, experienced significant growth, fitness businesses faced their own set of challenges. These included disruptions in equipment supply chains, staffing shortages due to health concerns, temporary closure of physical locations, and a swift change in consumer preferences towards virtual and outdoor fitness options.
However, there’s positive news for those in the fitness industry, thanks to a supportive measure from the United States government. You might be familiar with the Employee Retention Credit (ERC), a component of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
What’s the idea behind the ERC? Basically, was initially offered to eligible businesses to encourage eligible them to keep their employees on the payroll during the pandemic.
How do you know if your fitness business is eligible for the ERC? Check out these FAQs to learn more about qualifying and applying for the Employee Retention Tax Credit.
Example: Kentucky, April 30, 2020 – Governor Beshear announced the state’s plan to gradually reopen business activities. The following business sectors are in line to tentatively restart:
May 11 – Manufacturing, construction, vehicle and vessel dealerships, professional services (at 50% of pre-outbreak capacity), horse racing (without spectators), pet grooming and boarding
May 20 – Retail, houses of worship
May 25 – Social gatherings of no more than 10 people, barbers, salons, cosmetology businesses and similar services
Find More Government Orders Specific to Your State on Our Insights Page
We’ve compiled these FAQs to help you learn more about the Employee Retention Credit and how it might benefit your automotive business:
How Does the Employee Retention Credit Help Businesses in the Fitness Industry?
How Do I Know if My Fitness Business is Eligible for the ERC?
Your business may be eligible for the ERC if its operations were fully or partially suspended by governmental COVID-19 orders, thereby limiting commerce, travel or group meetings. You might also be eligible if your business experienced a significant decline in gross receipts during 2020 or within the first three quarters of 2021. New startup businesses that began operations after February 15, 2020, may also qualify, regardless of revenue.
There are two main ways to be eligible for stimulus refunds:
- If your business matches the required decline in revenue within any quarter of 2020 or 2021.
- If you have W-2 employees.
For How Much of a Tax Credit Might My Business Be Eligible?
For 2020, the ERC is a credit against certain payroll taxes of 50 percent of the wages you paid — up to $10k per employee — from March 12 – December 31, 2020 (capped at $5k per employee).
For 2021, the ERC is a quarterly tax credit of 70 percent of the first $10,000 in wages per employee in each quarter of 2021 from January to September 2021 (capped at $7K per employee per quarter).
How Long Does the ERC Program Last?
The Employee Retention Credit expired in September 2021. But, qualified businesses, companies and employers can still file paperwork and retroactively receive claims for the ERC in 2023. How” By filing a Form 941-X for relevant quarters.
For all four quarters in 2020, the deadline to apply is April 15, 2024; for all quarters in 2021, the deadline is April 15, 2025.
How Do I know Which COVID-19 Governmental Orders Were Enacted in the State Where My Fitness Business is Located?
We have a list of state-specific COVID-19 orders on the Insights page of our website. Just click on your state to see the applicable orders and restrictions.
Is the Employee Retention Credit the Same as the Paycheck Protection Program (PPP)?
How Do I Apply for the Employee Retention Credit?
As an employer in the fitness industry, you must first determine your eligibility, starting by ensuring you meet IRS qualifications. To retroactively claim the ERC, amend previously submitted Forms 941 by filing and submitting Form 941-X for each qualifying quarter.
Are you unsure about how to file a Form 941-X amendment for the Employee Retention Tax Credit? Do you need assistance preparing and submitting your application? If so, reach out to one of the experienced tax professionals here at StenTam. We’ll not only guide you through the process but also ensure you get all the credit for which you’re due, all while maintaining compliance and minimizing risk.
Qualifying orders (From IRS)
What kind of government orders qualify my business or organization for the ERC? (added July 28, 2023)
To qualify for ERC, you need to have been subject to a qualifying government order related to COVID-19 that caused a full or partial suspension of your trade or business operations. The government order may be at the local, state, or federal level.
Examples of governmental orders:
- An order from the city’s mayor stating that all non-essential businesses must close for a specified time period;
- A state’s emergency proclamation that residents must shelter in place for a specified period, except for essential workers;
- An order from a local official imposing a curfew on residents that impacts the operating hours of your trade or business for a specified time period;
- An order from a local health department mandating a workplace closure for cleaning and disinfecting.
Can I rely on a recommendation, bulletin or statement issued by a government authority to qualify for ERC? (added July 28, 2023)
No. To qualify for the ERC, you must have been subject to a government order that fully or partially suspended your trade or business.
Recommendations or statements encouraging you to take certain actions are not orders.
If you use a third party to calculate or claim your ERC, you should ask them to give you a copy of the government orders – not a generic narrative about an order. Read the order carefully and make sure it applied to your business or organization.
Is being subject to a government order enough to make me eligible for ERC? (added July 28, 2023)
No. You need to demonstrate that the government order was related to COVID-19 and that it resulted in your trade or business being fully or partially suspended.
What does it mean to be fully or partially suspended? (added July 28, 2023)
Whether your business or organization was fully or partially suspended depends on your specific situation. For examples, see Notice 2021-20, Part III, Section D.
Some examples of who doesn’t qualify under this eligibility factor:
- If all your employees were able to telework during the pandemic and your business continued to operate, your business wasn’t suspended.
- If your customers were affected by a stay-at-home order, but no orders applied to your business operations, you weren’t suspended.
- If you voluntarily closed your business or reduced hours of operation, you weren’t ordered to suspend.
You could still qualify for ERC based on a decline in gross receipts even if you don’t qualify under suspension of operations due to government order.
Was my business or organization fully or partially suspended if I had a supply chain issue? (added July 28, 2023)
A supply chain issue, by itself, does not qualify you for the ERC.
The IRS provided a narrow, limited exception if an employer was not fully or partially suspended but their supplier was. However, it applied only when the employer absolutely could not operate without the supplier’s product and the supplier was fully or partially suspended themselves.
In addition to having the supplier’s governmental order, you will need to show that:
- The government order caused the supplier to suspend operations,
- You couldn’t obtain the supplier’s goods or materials elsewhere (regardless of cost), and
- It caused a full or partial suspension of your business operations.
StenTam can help you discover which tax credits your business qualifies for.
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