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'I'd never heard of this one': Small businesses encouraged to apply for payroll tax credit

Fearing not enough people knew about the Employee Retention Tax Credit, a Washington man created a website and software to get the word out.

PORTLAND, Oregon — Many small businesses continue to struggle after months of closures and restrictions. That includes The By-Pass Bar and Grill in Dayton. General manager Mylee Smith opened the Yamhill County business shortly before the pandemic hit, only to have to reverse course to save it.

“The hardest thing was probably telling my employees that they weren't employed anymore,” said Smith. “It’s definitely hard to go from open to close, indoor to outdoor, 25% capacity to 50% capacity… just, everything’s crazy."

Fortunately for Smith, she made it through and eventually rehired all her employees. She also sought help through the Paycheck Protection Program. However, there was another source of financial help that she initially overlooked: the Employee Retention Tax Credit (ERTC).

“I'm the one who finds all these grants and stuff, but I'd never heard of this one,” said Smith.

Smith caught wind of the ERTC through Tom Sauvageau, a small business finance and accounting consultant based in Enumclaw, Wash. Sauvageau was so struck by how few employers and even accountants seemed to know about the ERTC, he launched a website called ERTCFiling.com.

“Why I was attracted to this initially," said Sauvageau, "is it's not a corporate tax credit. This is a small business tax credit."

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Through Sauvageau's website, people can purchase software similar to TurboTax, which helps them file for the ERTC. There's also a free calculator tool that anyone can use to estimate how much money they might be eligible for. 

Sauvageau suggested doing that before purchasing his software or calling their certified public accountant to look into it. 

More than anything, Sauvageau said he just wants people to know that the ERTC exists.

“Unless they know it, how are they going to get it?” said Sauvageau. “I don't care if they're going through me or somewhere else, it's the educational piece of making sure they understand how important this is, how big this is.”

In 2020, eligible businesses were able to file for a maximum ERTC of $5,000 per employee for the whole year. In 2021, the maximum credit increased to $7,000 per employee, per quarter. That means a maximum of $28,000 per employee each year. To qualify for the ERTC, small business owners need to have been impacted by at least a partial shutdown, like reduced capacity restrictions. They must reapply for the ERTC every quarter.

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After working with Sauvageau, Smith learned she qualified for about $34,000 through the ERTC.

“Even though I'd already filed taxes in 2020, Tom was able to go back and redo them and apply that tax credit for me,” said Smith.

Smith planned to use some of the money to purchase a new cooler for the restaurant and possibly hire another employee. Right now, Yamhill County is still in the high-risk category, forcing Smith to operate at just at 25% capacity. 

As challenges continue, she’s grateful for all the help she can get.

“We're just one of those small businesses that just really depends on our small community.”