UP TO $26,000 PER EMPLOYEE
The Employee Retention Tax Credit (ERC) may be available to your business if it was negatively impacted by Covid-19.
A refundable payroll tax credit (= cash)
No cost until you receive your refund
Free refund estimate and fast application
Time sensitive: filing deadlines are soon
Complex: export guidance is recommended
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What is the Employee Retention Credit?
It’s a refundable payroll tax credit paid by the IRS. Congress introduced this program to reward companies for each W-2 employee kept on payroll during the height of the Covid-19 pandemic. Small and medium businesses will greatly benefit from this program.
Eligible businesses can receive a refund of up to $5,000 per employee for all of 2020 and up to $7,000 per employee kept on the payroll for each quarter for Q1 through Q3 of 2021. That’s a total refund of up to $26,000 per employee kept on your payroll during that period.
THE IRS EXPECTED THAT 70-80% OF SMALL/MEDIUM BUSINESSES WOULD BE GOOD CANDIDATES TO QUALIFY FOR THE ERC PROGRAM BUT…..IT IS UNDERUTILIZED WITH MOST ELIGIBLE BUSINESSES NOT YET CLAIMING THEIR REFUND BECAUSE:
Recent Policy Changes
The ERC program has seen many expansions and amendments by Congress
Lack of Knowledge
Many business owners are missing out on this opportunity due to lack of correct information
Complicated & Complex
It is advised to work with a ERC program expert to help your business get the full refund amount
Business can still retroactively apply for the credit paid on wages in 2020-21, but not for long
Qualification requirement #1
Your business must be a “small business”
Any employer that operates a trade, business, or tax-exempt organization (and having at least 2 full-time employees not including ownership)
For the 2020 ERC refund, having fewer than 100 full-time employees
For the 2021 ERC refund, having fewer than 500 full-time employees
Or be a “Recovery Startup” opening Feb. 15, 2020 or later (and meeting the different criteria in that case)
Qualification requirement #2
Your business was impacted by Covid-19
You experienced a signficant decline in gross receipts in 2020 or 2021 (as compared to 2019) OR had operations that were affected by government orders resulting in limitations of commerce, travel, or meetings, such as:
Full and/or partial shutdowns
Your business had a limited capacity to operate
Your business operations were interrupted
There were disruptions to your supply chain
Your hours of operation were reduced
Your offerings to customers were reduced
Frequently Asked Questions About the Employee Retention TAX Credit (ERC)
How does a business qualify for the Employee Retention Credit?
Businesses of all sizes across almost every industry, including startups, nonprofits, corporations, LLCs, and small businesses can qualify for Employee Retention Credit if they were completely or partially shut down due to governmental orders or experienced a significant decline in gross receipts during the pandemic.
All across the United States, local government restrictions and mandates were put into place: social distancing, being compelled to work from home, or even the closure of your business in its entirety. This program is meant to alleviate some of the economic pain associated with such events.
How much is the ERC tax credit worth to a business?
The rules for 2020 differ from 2021:
- In 2020, businesses that employed less than 100 full-time employees in 2019 can claim up to $5,000 per employee for the calendar year.
- In 2021, that amount was increased to a maximum of $21,000 per employee for businesses that employed less than 500 full-time employees in 2019.
The ERC tax credit is complicated and the IRS follows strict regulations to determine who can qualify. We recommend a professional, specialized expert to help you with this refund claim process.
When does the Employee Retention Credit expire?
The Employee Retention Credit expired on September 30, 2021 (or December 31, 2021 for a Recovery Startup business).
While the ERC tax credit is no longer in effect, employers can still claim the credit for wages paid during the active period by filing amended returns. Businesses can file Form 941-X up to three years after filing or two years after paying, whichever is later. Accordingly, you have until 2023 to obtain the credit for quarters in 2020 and until 2024 to apply for the credit for 2021.
What are the deadlines to file an application for the ERC refund?
You can apply for the ERC until the end of September 2024 by submitting an amended payroll tax return claiming the Employee Retention Credit for the specific quarters in which your company qualifies. However, you must file your amended 941-X tax return within three years of the date you filed your original 941 payroll tax document. This means that waiting longer to file will result in a smaller credit refund as older quarters become ineligible to file for.
Can I still receive the Employee Retention Credit if I’ve already filed my business’s 2020 and 2021 federal payroll taxes?
Yes, if you have already filed your taxes for 2020 and/or 2021, the ERC can be applied through either a credit to your tax bill or a refund of tax money you already paid.
Can I still receive the Employee Retention Credit if I’ve already received a PPP loan?
Yes, your business can receive an ERC tax refund despite receiving Paycheck Protection Program (PPP) funds in the past. This PPP amount will be taken into account when calculating your ERC refund.
When the CARES Act was first passed, businesses had to choose between the two programs but that was subsequently changed. Employers can claim the ERTC even if they received a PPP loan. However, if the business applied for loan forgiveness, the credit cannot be taken on the same qualified wages. Any wages that did not fall under the loan forgiveness can be eligible.
What is the key difference between the PPP and ERC programs?
PPP was a forgivable loan, while ERC returns the payroll taxes that your business has already paid for the specific time period covered by ERC. Once the ERC funds are paid by the US Treasury to your business, no further action is required.
These funds do not have to be paid back and can be used for any purpose. That means cash for businesses to fund operations and capital expenditures, pay back other loans, and reduce the need for additional financing.
Can I still receive the Employee Retention Credit if I didn’t experience a decline in gross receipts?
It’s true that one way to qualify for the ERC is to show a significant decline in gross receipts in 2020 and/or 2021 compared to 2019. However, you can also be eligible for this tax credit if you were completely or partially shut down due to governmental orders or you are a Recovery Startup business. In the latter two situations, you are not required to show a decline in gross receipts.
Can I still receive the Employee Retention Credit if I operate a non-profit?
Non-profits can apply for the ERC if they were partially or fully shut down due to governmental orders or they can show a significant decline in gross receipts in 2020 and/or 2021 compared to 2019.
What is a Recovery Startup business?
This is any business that opened its doors during the pandemic (after February 15, 2020), had gross receipts less than $1 million for both 2020 and 2021, and has at least 1 W-2 employee (not including ownership).
Can I apply for the ERC refund by myself?
Yes, however determining the proper amount of a refund is a complex accounting process (even many tax/CPA professionals may find the ERC program quite difficult to navigate). These are based on many factors including qualifying quarters, number of employees, hours worked, wages paid and if applicable, PPP loans, group health premiums and participation in other government programs to name a few. We recommend using accounting experts that meet 100% compliance for IRS rules and processes and deliver an accurate ERC tax credit amount. They will evaluate whether you qualify and prepare the necessary documentation to support your ERC claim.
How long does it take to receive the Employee Retention Credit (ERC) refund?
With a proper error-free filing, most eligible businesses will receive their ERC refund within six month of filing. As more businesses learn about the ERC opportunity and rush to meet the upcoming filing deadlines, it is recommend to file as soon as possible ahead of this potential backlog in processing. It should still not take that long to receive your ERC refund.
Is the Employee Retention Credit (ERC) legitimate?
Yes, the ERC is a real program authorized and funded by Congress. However, due to large amounts of money available, it is important to be aware that questionable operators may have been motivated to get involved with the refund claim process. It is important to work with a reputable, competent, and experienced team of experts to prepare your ERC claim.
Do churches qualify for the Employee Retention Credit (ERC)?
Yes, under the same rules as any other organization, e.g. either a reduction in gross receipts or the reduced activity associated with mandated restrictions/shutdowns. Eligibility is also possible even if PPP funds were already received. All religious organizations should consider reviewing their eligibility for the ERC refund. Due to the substantial number of government orders limiting normal activities in 2020 and 2021, many such organizations have received substantial monetary benefits, in addition to PPP benefits already received.
The process of getting your ERC refund can be made stress-free by using an experienced team of experts
It requires working with those that are familiar and up to date with the program and know how to file correctly
No Cost to Apply
Get your estimated ERC refund calculated, then start the process with no upfront costs at all
Simplified and Streamlined
With the right team, all of the IRS tax filing work will be done on your behalf by subject matter experts
Maximize the ERC Refund
Avoid filing mistakes and delays that could cost your business all or part of the eligible refund amount
Tax credit professionals act with integrity and ensure your ERC refund claim is accurate and honest