What is the employee retention tax credit (ERTC) that Closet Storage Concepts qualified for?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
in excess of the FDIC limit. At December 31, 2024, amounts in excess of the FDIC insured limit was $102,887.
NOTE 11 OTHER INCOME – ERTC REFUNDABLE CREDITS
The CARES Act provides an employee retention tax credit ("ERTC"), which is a refundable tax credit against certain employment taxes for eligible employers. For 2020, the tax credit of up to $5,000 per employee is equal to 50% of qualified wages paid to employees during the year, capped at $10,000 of qualified wages per employee. For 2021, the tax credit of up to $7,000 per employee is equal to 70% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through September 30, 2021. The Company qualified for the tax credit under the CARES Act during 2020 and 2021; therefore, a tax credit in the amount of $776,293 was recognized and included in other income on the statement of operations as of December 31, 2022, which is the year in which the qualification was rea
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the company qualified for the Employee Retention Tax Credit (ERTC) under the CARES Act during 2020 and 2021. The total tax credit recognized was $776,293, which was included in other income on the statement of operations as of December 31, 2022, the year the qualification was realized.
For 2020, the ERTC provided a tax credit of up to $5,000 per employee, equivalent to 50% of qualified wages paid, with a cap of $10,000 of qualified wages per employee. In 2021, the tax credit increased to up to $7,000 per employee, representing 70% of qualified wages paid per quarter, also capped at $10,000 of qualified wages per employee through September 30, 2021.
As of December 31, 2024, a related receivable of $413,641, comprised of the credit receivable only, was included on the balance sheet. This indicates that Closet Storage Concepts is still in the process of receiving the full benefit of the ERTC. A prospective franchisee should note that this credit was a one-time benefit related to the pandemic and is not an ongoing source of income.