By Ed Avis
Many costume businesses were greatly helped by the Payroll Protection Program (PPP), which offered significant forgivable loans to small businesses hurt by the COVID pandemic. But another big benefit exists, at least if you kept your employees on payroll and can show a decline in revenue because of COVID (which is true for most costume shops): the Employee Retention Tax Credit.
The Employee Retention Tax Credit provides a credit of up to $5,000 per employee you had in 2020; that amount jumps to $14,000 in 2021. In order to qualify for the credit for 2020, you need to show that your revenue declined by 50 percent in one quarter. For 2021, you'll just need to show a 20 percent decline. You can get the credit even if you got a PPP loan (though there are limitations), and you can request an advance payment on the credit from the IRS if the amount will exceed the payroll taxes you'll pay.
Those are the basics, but there are many more details. You should ask your accountant or tax professional to help you apply for the credit. You can read more about it in this notice from the IRS and here in an article by CNBC.