By: Adam Wykle
If you are a small business owner, you may be eligible for the Employee Retention Credit (ERC). The ERC is a refundable tax credit that can benefit businesses who kept employees on the payroll during the COVID-19 pandemic. It was part of the original Cares Act Legislation.
The ERC was expanded under the Consolidated Appropriations Act, which took effect on January 1, 2021. As a result of this expansion, employers who received Paycheck Protection Program (PPP) loans are now eligible for the ERC in 2020 and 2021 if other eligibility tests are met.
If this is something that you are just now hearing about, you’re not alone. We have sent several communications out about it, but according to the National Federation of Independent Business, only 32% of small business owners said they were somewhat familiar with the credit in 2021. Small businesses can still claim the ERC if they haven’t already, but the ERC rules can be complex.
The eligibility for these funds are different from 2020 to 2021. Your small business may be eligible for the ERC if one of the two tests below is met:
- Did you significantly decline in gross revenues in 2020 (50%) and 2021 (20%) compared to 2019?
- Were your business activities suspended due to government shutdown?
If the eligibility tests are met, the credit can be up to $5,000 per employee per quarter in 2020 and up to $7,000 per employee per quarter during the first three quarters of 2021. This can be a significant benefit for a business that is still struggling from the pandemic or is trying to grow out of the effects of the pandemic.
Suttle and Stalnaker, PLLC has helped numerous businesses apply for the Employee Retention Credit, and welcome the opportunity to see if your business may qualify. For more information, please contact your Suttle and Stalnaker representative or a member of our CAAS Department.