Like many other businesses, law firms faced significant challenges in retaining talent during the COVID-19 pandemic. The Employee Retention Credit (ERC) has emerged as a valuable financial tool for law firms that incentivized and retained their employees during the pandemic.
In this article, we’ll explore the benefits of the ERC for law firms and how it not only provides financial credit for past performance but how it can support their efforts in retaining skilled professionals and growing their firms both today and in the future.
Understanding the Employee Retention Credit
The Employee Retention Credit is a tax credit introduced under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and extended through subsequent legislation. The credit is available to qualifying businesses, including law firms, that kept their employees on the payroll during the pandemic.
Eligibility and Financial Benefits for Law Firms
The ERC is available to firms that experienced a significant decline in gross receipts or a full or partial suspension of operations due to government orders.
Law firms can claim the Employee Retention Credit if they meet specific criteria. The maximum tax credit available is $5,000 for 2020 and $7,000 per quarter for the first three quarters of 2021, for a full credit of up to $26,000 per employee. This credit can offset employment tax liabilities or be claimed as a refund, providing valuable financial relief to law firms.
Retaining Skilled Professionals
Law firms heavily rely on talented and experienced professionals to provide quality legal services. However, the competitive nature of the legal industry and the challenges posed by the pandemic have made it increasingly difficult to retain skilled employees. The Employee Retention Credit allows law firms to offer competitive compensation packages, retain key employees, and reduce turnover risk.
The ERC helps law firms retain employees financially and enhances employee morale and loyalty. Law firms can foster a sense of security and stability among employees by demonstrating a commitment to retaining their workforce. This can increase job satisfaction, productivity, and positive work culture within the firm.
Long-term Implications
Beyond the immediate financial benefits, the Employee Retention Credit can have long-term implications for law firms. Retaining talented professionals allows firms to maintain their expertise and reputation, resulting in client satisfaction and retention; additionally, having a stable workforce positions law firms for future growth.
The Employee Retention Credit has become a valuable resource for law firms striving to retain employees during these challenging times. By leveraging this tax credit, law firms can support their workforce financially, foster loyalty, enhance morale, and maintain their competitive edge.
As the legal industry continues to navigate the aftermath of the pandemic, Employee Retention Credit is a powerful tool for law firms to secure their talent pool and ensure long-term success.
Bottom Line Concepts Helps Law Firms With the ERC
The dedicated experts at Bottom Line Concepts can help you make sense of the Employee Retention Credit. We’re experienced in helping law firms determine their ERC eligibility and file accurately to receive the tax credit they’re due. Contact us today and schedule your free, no-obligation 15-minute introductory phone call.
