Are you wondering if you’re too late to claim the Employee Retention Credit or ERC? Small business owners like you, too, might be loading their internet search with queries like, “Can I be eligible for Employee Retention Credit if I didn’t see a dip in revenue?” “How can I know if my business qualifies?” “Can I claim the ERC if I started my business during COVID-19?” So today, we’re uncovering all things ERC in one easy-to-skim five-minute article. After all, we know your time is your most significant resource. And you’ve got a lot of business plates to juggle.
So, what exactly is the Employee Retention Tax Credit (ERC)? The ERC is a fully refundable tax credit set up by the government due to the COVID-19 pandemic. It’s the government’s way of giving back to businesses and essentially rewarding them for keeping employees on payroll between 2020 and 2021. And with up to $26,000 per employee available, it can increase your chances of success. How so? It can offset or eliminate payroll taxes and is currently one of the most significant refunds businesses can get.
How Do Businesses Know if They’re Eligible for the Employee Retention Credit?
To determine if you can take advantage of ERC stimulus funds for your small business, check the qualifying quarters and possible eligibilities below.
General Requirements for Each of the Date Ranges Below:
- You carried on a business or tax-exempt organization
- You had at least one W-2 employee
- If COVID-19 did not directly impact your business’s revenue – The “significant decline in gross receipts” test for both 2020 and 2021 would not apply.
Mar. 13, 2020, through Dec. 31, 2020: Up to $5,000 can be credited per qualifying employee if your business:
- Was partially or fully suspended due to COVID-19 government shutdown orders
- Experienced 50 percent or less gross receipts for the same calendar quarter in 2019
If you were self-employed but had at least one employee, you may qualify for Employee Retention Credit wages paid to those employees, but the owner’s wages can not be included in that number.
Jan. 1, 2021, through Sept. 30, 2021: Up to $21,000 can be credited per employee if your business:
- Was partially or fully suspended due to COVID-19 government shutdown orders
- Experienced 80 percent or less gross receipts for the same calendar quarter in 2019*
*If your business began after February 15, 2020, you could use 2020 for this comparison instead.
Oct. 1, 2021, through Dec. 31, 2021: Up to a $50,000 credit per calendar quarter if, and only if, your business is considered a recovery startup business.
Common Eligibilities for the ERC
Did your business face hardships during 2020 or 2021? If so, you may qualify:
- Full or partial shutdown
- Significant decline in sales
- Full or partial suspension in business
- Supply chain or distribution interruption
- Inability to access equipment
- Interrupted operations
- Reduction in operation hours
- Reduction in customer & client interaction
- Switching hours for sanitation reasons
- Faced decrease in providing services
Additionally, if your business belongs to one of the following industries, you could qualify for credits:
- Education: Colleges and universities
- Non-Profit or tax-exempt organizations
- Hospitality and Retail
- Industrial
- Real Estate and Construction
- Technology
Both essential and non-essential businesses could be eligible for ERC because nearly all businesses were forced to adapt to safety restrictions and government-mandated shutdowns due to the pandemic.
Could My Business Still Be Eligible for the Erc if I Opened It After February 2020?
In short, yes! If you started your small business after February 2020, you could claim Employee Retention Credit as a “startup recovery business.”
What is a Recovery Startup Business?
Congress realized that the ERC program wasn’t reaching as many businesses as they had originally intended so they expanded the program through the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
In short, a Recovery Startup Business is one where:
- Operations began after Feb. 15, 2020
- The employer was not eligible due to a decline in gross sales or operations suspension
- Had less than 50 full-time employees
- Had less than $1 million in gross receipts within the taxable year
If a small business meets the above requirements, it could also claim ERC for the third or fourth calendar quarter of 2020.
How Much Can My Business Claim With ERCs?
You could get up to $26k per employee with Employee Retention Credits. So even if you’re not positive that your company could qualify, if you can relate with any of the above eligibilities, there’s a good chance you do. Plus, you don’t want to pass up extra funding for your business to thrive after the previous year’s hardships.
As an aside, did you already apply for funds from the Paycheck Protection Program (PPP)? The Relief Act also opened the credit up to businesses who originally had to pick between the PPP and ERC. Connect with our team to ensure you’re not leaving money on the table and maximize your ROI!
Who Can I Trust to Help My Business Apply for the ERC?
Stenson Tamaddon exists to deliver optimal yield with minimal disruption to customer business operations. Leveraging technology-enabled solutions that deliver real results, we help business owners unlock the full potential of economic relief programs and specialized tax incentives.
Unlike other tax solution companies, we work with you to help you qualify, apply for and leverage existing stimulus programs that support your business’s bottom line—no need to work with external preparers or other companies.
- Secure Technology: Our technology allows you to transfer information to our team for every transaction securely.
- Always Compliance-Driven: Never skipping a beat, working with our team means that every filing will be executed with compliance in mind – no exceptions.
- Risk-Free Filing: Audit defense included when filing for ERC.
How Do I Claim My Tax Credit?
If the pandemic has impacted your small business, don’t miss your chance to get the relief you deserve!
At Stenson Tamaddon, we can determine if you meet the requirements to qualify for ERC, help you fill out a Form 941X based on your employer’s quarterly federal tax return, and even file for an advance payment on your credit. Our job is to maximize the credit you receive and minimize any risks that come with it.
It’s no secret that there are a lot of logistics that go into filing for your business’ Employee Retention Credit. That’s where we come in. We handle finance regularly, so leverage our experience, and we’ll ensure your business receives the maximum credit. We can help uncover all funding opportunities your business qualifies for, get a quote for your claim, and begin filing for your ERC credit.
Talk with one of our tax credit specialists today to learn more about how you can get the money you deserve!
