While the Paycheck Protection Program (PPP) received a great deal of attention during the early days of the pandemic, it is also important that you are aware of Employee Retention Credits or "ERC." ERC is a credit that, for eligible businesses, provides a very significant cash benefit (up to $26,000 per employee during 2020 and 2021), critical for struggling businesses.
Our team at Frost Law has been following the Employee Retention Credit program carefully since its inception. We would be glad to assist you—free of charge—in determining WHETHER YOU QUALIFY FOR THE CREDIT, and in what amount. As eligibility determinations and computations can be complex, even if you already believe you have taken advantage of the credit, we welcome the opportunity to provide you with a second opinion.
Note, you can receive this credit even if you were awarded PAYCHECK PROTECTION PROGRAM (PPP) funding. However, before you apply for PPP forgiveness, it is important to speak with a professional regarding maximizing PPP forgiveness and maximizing the ERC, as the two are interrelated. THERE ARE TWO WAYS TO QUALIFY FOR THE CREDIT:
First, if your business was affected by a mandated full or partial suspension of business then you automatically qualify for the ERC. This includes any actual closures, as well as restrictions on hours or capacity. It is important to note that this provision may also extend to suppliers of the business. If the facts and circumstances indicate that the business’s operations were/are fully or partially suspended as a result of the inability to obtain critical goods or materials from its suppliers because they were required to suspend operations, then the business may be considered an eligible employer for calendar quarters during which its operations are fully or partially suspended and may be eligible to receive the employee retention credit. Our comprehensive analysis of each client's situation includes a consideration of all facts and circumstances related to any suppliers.
The second way to qualify, is based on a significant reduction in gross receipts. In 2020 your business gross receipts must be down 50% compared to the same quarter of 2019 in order to qualify. In 2021 this requirement is even easier to meet, because you only need a 20% reduction in gross receipts to meet the test.
Please watch the video below hosted by Rebecca Sheppard and Matt Eddleman of Frost Law for more information on ERC eligibility.