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Is My Business Eligible for the Employee Retention Tax Credit?

June 10, 2022

The past few years have been rather tumultuous for business owners, especially in a financial sense. Changing consumer attitudes, a volatile economy, and various regulations have made it more difficult than ever to be an entrepreneur—and while money can’t solve every problem, it certainly can make many of them simpler to navigate.

One potential cash injection that many business owners are not aware of is the Employee Retention Tax Credit (the ERC or ERTC). This is a one-time tax credit that applies to businesses that were operational in 2020 and 2021 and impacted by the pandemic. This credit can be claimed retroactively by affected businesses, so read on to learn more about it and to determine if you might be eligible.

Is My Business Eligible for the Employee Retention Tax Credit?

There are two categories of businesses that are eligible for the ERC: businesses whose revenues were not consistently growing compared to 2019 figures, or businesses that had government mandates that restricted how they were operating. This latter point applies to businesses that had to switch to curbside, implement new sanitation measures, or change their operations in any way due to government safety mandates.

How Much Can I Get With the Employee Retention Tax Credit?

The amount that a business can receive from this tax credit is based on your staffing counts and the number of quarters your business was impacted, maxing out at $26,000 per employee. So, even businesses with small payrolls can receive a major credit if they were impacted for the majority of the pandemic.

Can I Use the ERC if I Received PPP Funds?

When this program was implemented, businesses that received PPP funds were ineligible for the ERC, but this is no longer the case. Typically, if you have received PPP funds, it will impact the total ERC you are eligible for, but your business will likely still qualify for the credit.

How Can I Use My ERC Funds?

With the PPP program, it was stipulated that business owners use the funds they received for payroll—but the money received from the ERC does not have the same type of restrictions in place. Many business owners sacrificed contributing to their retirement planning, upgrading equipment, or hiring for new positions during the pandemic, but with money from the ERC, these things may be a possibility.

If you’re curious about how the ERC could help your business, we are here to be a resource for you! Contact us today to learn more.