What is the Employee Retention Credit (ERC) that Cinch I.T. applied for?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
er 31, 2019 and 2020 were discovered during the current year. Accordingly, an adjustment of $21,198 was made to increase receivables – trade for the year ended December 31, 2020.
In 2021 the Company applied for the Employee Retention Credit ("ERC") established by the CARES Act in the amount of $38,487. The tax credit applies to payroll taxes paid during the year ended December 31, 2020. The credit is expected to be received in the year ended December 31, 2022 and is in
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, in 2021, the company applied for the Employee Retention Credit (ERC) established by the CARES Act. The amount of the ERC was $38,487. This tax credit was applicable to payroll taxes that Cinch I.T. paid during the year ending December 31, 2020. The FDD states that Cinch I.T. expected to receive the credit during the year ending December 31, 2022.
The FDD also notes that the ERC is included as a long-term receivable on the balance sheet. Additionally, it is categorized as extraordinary income in the statements of operations and member's deficit. This classification is due to what the FDD describes as the unprecedented nature of COVID-19.
For a prospective Cinch I.T. franchisee, this information provides insight into how the company managed its finances during the COVID-19 pandemic. It shows that Cinch I.T. took advantage of government relief programs like the CARES Act to offset payroll tax expenses. The inclusion of the ERC as a receivable and extraordinary income suggests that the company anticipated a positive financial impact from this credit, which could be a sign of proactive financial management during a challenging period.