Employee Retention Credit

Most Common Misconceptions Regarding the Employee Retention Credit

1. We took the PPP and do not qualify.

False. The stimulus package passed in December 2020 specifically allows for companies who received PPP funds to also take the ERC!

2. We are an essential business and therefore we do not qualify.

False. An essential business may qualify for the ERC either because its operations were fully or partially suspended because of a governmental order, or because they meet the necessary revenue decrease tests.

3. We were not shut down and stayed open the whole time and therefore do not qualify.

False. If your business had to change operations in any way due to governmental orders OR if gross receipts declined in a quarter to quarter comparison, you may be qualified.

4. Our company did not have any quarters that experienced a 50% revenue decline, therefore we do not qualify.

False. Your business needs to EITHER meet the necessary revenue decrease tests OR suspension in operations, not both. Almost every business was impacted in some way by a national, state, or local governmental order.

5. We are profitable and therefore do not qualify.

False. We have helped many companies that were profitable in 2020 and 2021 receive anywhere from thousands to millions of dollars in credits. This includes grocers, manufacturing, logistics companies, and more. If your business was impacted in some way by the pandemic, you may qualify.

6. We are a non-profit company and don't pay taxes, therefore we are not eligible.

False. Unlike other tax credits, this credit also applies to tax-exempt organizations, as it relates to PAYROLL tax. Many nonprofit schools, day care centers, counseling centers, ministries, churches, and clubs closed their buildings and/or partially suspended services to comply with government orders and guidelines. This cessation of services is a suspension of operations which could qualify that organization for the ERC.

Why is the Employee Retention Credit (ERC) important to my business?

You may be eligible to receive a tax credit up to $26,000 per employee. These are refundable payroll tax credits that can greatly impact your company’s bottom line.

In late December of 2020, Congress revised relief options available to businesses affected by the pandemic, including refundable credits for retaining employees in both 2020 and 2021. This expansion of the CARES Act Employee Retention Credit (ERC) creates opportunities for previously excluded recipients of PPP.

In March 2021, the stimulus package extended the credits making employers eligible through September 30, 2021.

Qualifying employers can earn up to $5,000 for 2020 and $21,000 per employee for Q1-Q3 2021.

To be eligible, your business must have been fully or partially suspended by government orders OR experienced a reduction in gross receipts on a quarter-to-quarter comparison test of 50% in 2020 or 20% in 2021.

Took advantage of the PPP already?

Retroactive to the effective date included in the CARES Act, the 2020 provision:

Provides that employers who received Paycheck Protection Program (PPP) loans can now qualify for the ERC with respect to wages that are not paid for with PPP proceeds;
Clarifies the determination of gross receipts for certain tax-exempt organizations; and
Clarifies that group health plan expenses can be considered qualified wages even when no other wages are paid to the employee, consistent with IRS guidance.

Let Us Help You:

Determine eligibility based on full/partial suspension OR gross receipts test.
Determine eligibility even if you're an essential business or didn't see a decrease in revenue Review required payroll information and PPP wages.
Determine credit availability and deliver an audit ready package Look for other credit opportunities to maximize incentives.