Men walking through factory wearing helmets reviewing tablet

Three Big ERC Benefits for Business Owners

Reading Time: 5

ERC Government Aid for Businesses That Survived the Pandemic

The COVID pandemic created new challenges for American businesses across all industries, and manufacturing companies were hit especially hard. According to the New York Times, nearly 22 million U.S. jobs were lost during the pandemic’s outset. Data also shows that companies in most industries are making rapid hiring efforts to recover those job losses.

To help support their recovery and stimulate the economy, eligible business owners can claim the Employee Retention Credit (ERC), a pandemic relief tax credit initially created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. Through the ERC credit, eligible businesses can receive a payroll tax refund from the Department of Treasury worth up to $26,000 per employee (ERC refunds are delivered by mail in the form of a check).

Interestingly, in a recent survey commissioned by Omega Accounting Solutions, researchers found that a large percentage of eligible businesses have not yet utilized their ERC benefits. But why are so many companies missing out on the ERC for business owners? A large number of advisors, accountants, and tax specialists were misinformed by outdated guidelines and falsely believe they don’t qualify.

Receiving PPP funds does not disqualify a company. If a business grew its revenue during the pandemic, it may still be eligible for an ERC refund. Businesses that were deemed essential and never fully shut down can qualify as well. It’s much easier to qualify for the Employee Retention Credit than many business owners realize.

Why Business Owners Should File ERC Now

Congress updated ERC eligibility guidelines multiple times in the past two years, and because of that executives should take another look at their ERC qualifications. Business owners that never looked into it, should as well. This is an opportunity to increase financial resources through a temporary stimulus program designed for small-to-medium-sized businesses. Do not miss out on the benefits of the ERC for business owners. Here are three reasons to file for ERC now.

1. Business Owners Could Receive up to $26,000 Per Employee

When first introduced as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020, the maximum credit allowable under the ERC was $5,000 per employee. With its renewal and expansion last year under the Coronavirus Response and Consolidated Appropriations Act, the full credit increased by an additional $21,000 per employee.

Many business owners’ favorite feature is that it’s not a future credit against next quarter’s tax liabilities — it’s a tax refund paid with a paper check mailed from the Treasury Department. Not all businesses will qualify for the maximum amount, but ERC benefits can still make a world of difference to a company’s bottom line.

2. ERC Benefits Are for Businesses that Survived the Pandemic

ERC qualifications favor business owners that either lost income during the pandemic or were impacted by government orders — especially those with less than 500 employees. If your business meets just one of the following qualifications, it is likely eligible to claim the ERC.

2021 erc qualifications for 2021
2021 ERC qualifications are much easier to meet than those for 2020.

A. Substantial Decline in Revenue

The easiest way for business owners to qualify for the employee retention credit is with a decline in revenue. Companies that lost income in 2020 or 2021, when compared to the same quarter in 2019 can qualify for ERC.

Originally, businesses had to experience a 50% revenue decline from 2019 to 2020, quarter for quarter. That threshold was substantially lowered to a 20% decline in 2021 when compared to the corresponding quarter of 2019.  Please note that ERC benefits are only available for the first 3 quarters of 2021.

Business owners that did not see a revenue decline — even those that grew their business during the pandemic — may still be eligible for the ERC. Continue reading below to learn how.

B. A Government Order Impacted Business Operations

Many business owners had to comply with pandemic-related government orders that forced them to modify procedures, making it more difficult (and in some cases, more expensive) to operate.

Companies in many states faced disruptive government mandates while already dealing with economic and staffing issues. Your business likely qualifies for the ERC government aid if pandemic mandates disrupted your business operations in one of the following ways:

  • A decrease in production
  • A full or partial shutdown of business operations
  • Reduced indoor capacity
  • Reduced operating hours
  • You had to stagger crew working times
  • Space out your crew on the assembly line (social distancing)

3. The Window to File for ERC Credit Ends in 2024 & 2025

When Does the ERC Credit End?

While there is still time for business owners to file for ERC, the window is finite. The first deadline to file for the Employee Retention Credit is on April 15, 2024. After this date, you can no longer claim the tax credit on 2020 taxes. The ERC deadline for the 2021 tax year is April 15, 2025.

While the window for ERC credit filing ends in 2024 and ‘25, Congress has the power to end this pandemic tax credit at any time — hence why it’s so important to file ERC now, while you still can.

File ERC now deadline when does ERC Credit end
Don’t miss the ERC filing window for 2020, which closes in April of 2024.

Claim ERC Benefits With an Experienced Provider

As a business owner, you work hard to give your company every possible advantage. Don’t disregard temporary ERC benefits without checking if you qualify. Omega Accounting Solutions can quickly determine if your company is eligible for ERC government aid, and handle the entire filing process for you.

Omega has been in business for over 15 years and has experience in multiple tax incentives for business owners. Omega’s tax credit experts have already filed ERCs for thousands of clients. They handle the entire process from start to finish including document collection, financial & impact analysis, credit calculations, ERC filing, and follow-up documentation. They perform due diligence on your company’s financial picture to ensure compliance with ERC qualifications.

Do not miss out on the many benefits of the ERC for business owners. Contact Omega today to find out if your company qualifies for the Employee Retention Credit.