CARES Law: Guide to the Paycheque Protection Program for Businesses

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The CARES law provides assistance to small businesses. Here’s what small business owners need to know to take advantage of this help.

What is the CARES law?

CARES is the abbreviation for Coronavirus Aid, Relief, and Economic Security Act. President Trump signed the bill on March 27, 2020. The stimulus package provides $ 2.1 trillion in assistance to individuals and businesses. Part of this money is reserved for small businesses.

Employee retention credit

Although not limited to small businesses, the bill offers a refundable payroll tax credit of up to $ 10,000 in wages paid to an eligible employee during the crisis. Credit is available to for-profit and not-for-profit businesses whose operations have been disrupted by government restrictions that have resulted in total or partial suspension of their business activities. The credit is also available to businesses whose quarterly revenues have declined 50% or more from year to year.

Salaries of employees who have been on leave or whose hours have been reduced are eligible for the credit. For employers with 100 or fewer employees, all salaries of full-time employees are eligible regardless of whether the employee has been put on leave or not.

The credit is equal to 50% of a maximum of $ 10,000 of eligible salary paid to an employee after March 12, 2020 and before January 1, 2021. The eligible salary includes not only the employee’s cash remuneration, but also eligible health costs paid by the employer. The employer will receive credits and any reimbursement if eligible, through their quarterly payroll tax returns.



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