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Which Businesses Qualify and How?
There are 2 ways that a business can qualify for ERC:
1) full or partial suspension of business operations as a result of government order or,
2) a significant decline in revenue compared to the same quarter in 2019. Decline in revenue is defined as equal or greater than 50% for 2020 and equal or greater than 20% for 2021.
The Employee Retention Credit (ERC) is a tax credit designed to help businesses keep employees on their payroll during the COVID-19 pandemic.
Taking the Employee Retention Credit (ERC) can be a huge benefit to an employer’s bottom line for several reasons:
Financial support: The ERC provides eligible businesses with a tax credit of up to $26,000 per employee for wages paid between March 13, 2020, and December 31, 2021. This can help businesses offset the costs of keeping employees on their payroll during challenging economic times.
Flexibility: Unlike other COVID-19 relief programs, such as the Paycheck Protection Program (PPP), the ERC can be used for any business expenses, not just payroll costs. This gives businesses more flexibility in how they allocate the funds and can help them cover a range of expenses, such as rent, utilities, and other operational costs.