As the coronavirus shut down most of the US economy and consumers stayed at home to slow the spread of the virus, millions of small-business owners across the country faced a similar issue. To stay viable, businesses had to react quickly and come up with untried strategies to improve their business models.
Many small firms, however, have failed. Others have survived and hope to exploit pandemic-era technologies to increase income and create new opportunities when the economy recovers, but the impact on millions of workers across the country remains unknown.
According to the Census Bureau, the United States produced more than 4.4 million new enterprises in 2020, the largest number on record. That’s a 51.0 percent rise over the 2010-19 average and a 24.3 percent increase from 2019. In January 2021 alone, half a million new enterprises were launched. Data from our most recent B2B study reveals how and why new small business owners made the move this year, and why many of them may reap the rewards.
According to the US Small Business Administration, there were 31.7 million small businesses in the United States in October, accounting for 99.9% of all businesses. 81% of small businesses employ no one, whereas 19 percent, or 6 million businesses, do.
To be sure, according to the Small Business Index, a statistic issued every quarter by the US Chamber of Commerce and MetLife, the top post-pandemic challenge facing entrepreneurs is earning enough money. Inflation and adherence to Covid-19 safety standards were also major concerns.
Worrisome Times ahead
Rising inflation means either raising prices or losing money for many small business owners. According to the US Bureau of Labor Statistics, the Producer Price Index, which monitors wholesale prices for products and services, increased by about 10% in 2021.
According to the Small Business Index, three out of five small business owners have had to raise prices in the last year. To cope with rising costs caused by inflation, several businesses have taken out loans or reduced employees.
Small businesses are currently having difficulty finding and maintaining suitable staff. According to the Goldman Sachs poll, 87 % of those presently hiring are having difficulty finding quality candidates for unfilled positions, and 97 % say it is impacting their bottom line.
Small businesses, which can’t always compete with major companies on compensation, are finding creative ways to attract and retain talent, according to Pardue. This involves including things like financial incentives and immunisation mandates.
There’s help from the Government
Businesses are being pushed to give better compensation and additional benefits in order to retain employees and take advantage of the post-Covid flourishing economy. They’re also up against a wave of prominent firms around the country that have raised wages and offered lucrative incentives. Amazon is paying a $1,000 sign-on bonus for select warehouse jobs; McDonald’s increased its minimum wage in May and now offers $400 and $500 bonuses for specific roles; and Chipotle pays an average of $15 per hour and gives existing employees a $200 referral bonus.
The ERC began with the federal Covid economic relief package and has since been enhanced to allow firms to recover more money back from wages paid to employees in 2020 and 2021. Businesses can get reimbursement for wages paid through the end of 2021, as well as retroactive compensation for wages paid in 2020.
For each quarter of the calendar year, eligible firms can claim up to 70% back on up to $10,000 in wages paid to employees, or a maximum of $7,000 per employee. It could mean a total of $28,000 in cash back each employee every year.
You can estimate your eligibility under 30 seconds using our ERC Eligibility Calculator
Alternatively you can also book a 15-minute consultation with our ERC tax experts. Remember ERC tax credit is a complicated 5000 pages long CARES Act and as such it can be easily overlooked or not fully understood by your finance team or accountant.