Recovery Startup Business Tax Credit

Did you start a business during the pandemic?

If you own a startup business that began operations on or after February 15th, 2020, you may qualify for a substantial tax refund through the Recovery Startup Tax Credit, a component of the Employee Retention Credit (ERC). This tax credit is simple to attain, and most new companies will qualify. A recovery startup business can receive a payroll tax refund up to $100,000 as part of the Employee Retention Credit (ERC).

Your startup could receive a tax refund just for having employees on payroll.

What Is a Recovery Startup Business?

According to the IRS, a recovery startup business is a company that started during the coronavirus pandemic (on or after February 15, 2020), and has an annual income of less than $1 million. This tax credit for startups was added to the ERC in 2021 as part of the American Rescue Plan Act in order to help new companies keep their doors open and stimulate the economy.

Does My Business Qualify for the Recovery Startup Tax Credit?

To qualify for the Recovery Startup Tax Credit, your business must have:

  • Started operations between February 15, 2020, and December 2021
  • Average annual income of less than $1 million
  • W-2 employees on payroll during quarter three and/or quarter four of 2021

How Much Money Can a Startup Business Receive Through ERC?

Recovery Startup Businesses can receive up to $100,000 through the Employee Retention Credit. Broken down by quarter, the credit is worth up to $7,000 per W-2 employee per quarter for quarters three and four of 2021. The refund is capped at a maximum of $50,000 per quarter, or up to $100,000 in total. Because the Recovery Startup Credit is a retroactive refund on 2021 payroll taxes, you’ll receive the money in the form of a paper check.

Can I still apply for the Recovery Startup Credit in 2023?

Yes, you can still apply for the Recovery Startup Credit until the program deadline in 2025. Business owners can retroactively amend their taxes for up to three years, so businesses that qualify for the 2021 credit must file their claim by April 2025.

Contact us to discover if you qualify while it’s still available.