Staying Nimble in a Changing Industry: Strategies for Contractors

In order to move forward and remain competitive in a changing landscape, companies should apply proactive strategies for issues ranging from COVID-19 relief to challenges faced in a changing workforce. This article highlights some top areas on which contractors should focus and provides insights on how to plan for what’s next.

Pursue COVID-19 Relief

The continuing effects of the COVID-19 pandemic impact all companies differently. While some businesses found success by shifting their focus to niche projects spurred by the pandemic, others are just now starting on delayed projects or are continuing to shift project schedules.

With several rounds of relief packages passed by the federal government, businesses have options that can help them manage cash flow.

Employee Retention Credit

Businesses are eligible for the Employee Retention Credit (ERC) if they:

  • Kept employees on payroll even though construction jobs were on hold due to a government-ordered lockdown
  • Experienced a decline in gross receipts during a 2020 quarter or the first two quarters of 2021, compared to that same quarter in 20191

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), specifically §2307(j), made Paycheck Protection Program (PPP) loans and ERCs mutually exclusive. As a result, many companies that applied for PPP loans did not have the option to take advantage of the ERC.

However, according to §207 of the Consolidated Appropriations Act, 2021, businesses are now allowed to claim the ERC even if they obtained PPP loans. This is retroactive, so contractors should analyze if there’s an opportunity to go back and amend payroll tax returns to claim credits.

The Consolidated Appropriations Act, 2021 also increased the credit to a potential maximum of $7,000 per eligible employee for each of the first two quarters of 2021,2 compared to $5,000 for all of 2020 based on the wages paid per eligible employee.3

Paid Sick & Family Leave Credits

Contractors may also be able to pursue paid sick and family medical leave credits. The Consolidated Appropriations Act, 2021 doesn’t require sick leave to be paid, but if a business with less than 500 employees voluntarily pays sick leave, then it may be eligible for a credit for days off preceding March 31, 2021. Payroll tax forms can be amended if the company did not originally claim this credit.4

Potential credits vary based on the reason for an employee’s absence and could be worth up to:

  • $5,110 over an aggregate 10 days if an employee is sick or required to self-quarantine as a result of COVID-19
  • $2,000 over the first 10 days if the employee needs to care for a sick family member or child due to closed schools
  • $10,000 for an additional 50 days if the employee needs to care for family or children5

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About the Authors

R.L. Widmer

R.L. Widmer, CPA, has been in public accounting since 2008.

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Katie Six

Katie Six, CPA, CCIFP, is Business Assurance Senior Manager at Moss Adams, LLP, located in Lake Tapps, WA

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