Businesses and employers in the United States have the option of claiming an employee retention credit for which they can receive up to 70% of the total payroll paid. However, many employers don’t know they can file for ERC even now. The eligibility criteria have been news hunt relaxed now, and you still have time to apply for ERC. Click here to learn more about ERC.
Most businesses have been affected by COVID. Businesses across the United States suffered losses, shutdowns, and supply disruptions after the onset of the pandemic. The financial hardships that came with the COVID restrictions are not any less for employers and businesses. And, programs like ERC definitely can be of great help for employers in these trying times.
What is ERC or Employee Retention Credit?
ERC is a federal government program under the CARES Act implemented in March 2020. This program has been put forward to encourage employers who retained their employees on the payroll even with the government-imposed COVID restrictions and songs india financial hardships.
Unlike PPP, ERC doesn’t have to be paid back. And moreover, you can spend the money from the ERC claim on whatever you intend to. In addition, you can qualify for ERC even if you have claimed for PPP. However, there are certain eligibility criteria to qualify for an ERC claim.
Who can Qualify for ERC?
You can qualify for ERC if your business has experienced a partial or complete suspension of operations
To qualify for ERC, you need to qualify for the partial or complete suspension of operations. For example, your production capacity has to be impacted or your operation hours should have been reduced to qualify for ERC. Other effects of COVID restrictions on businesses include disruption of the supply chain, delays of on-site work, client meeting restrictions, and suspensions or delays of distribution.
You can qualify for ERC if your business has experienced a significant reduction in revenue during any quarter of 2020 or 2021 as compared to 2019
You need to meet certain revenue requirements to qualify for ERC. For example, you need to have incurred a significant reduction in your revenue during any quarter of 2020 or 2021 as compared to the previous year. A 50% or 20% of reduction in revenue in 2020 and 2021 respectively, when compared to 2019 revenue will qualify you for ERC benefits.