Are you someone who wants to know more about the CARES Act Employee Retention Credit (ERC)? Do you want to find out who is applicable and who is not? If you said yes to both these questions then you need to read this article now.
Many misconceptions have been circulating ever since the CARES Act Employee Retention Credit (ERC) was passed.
Who Qualifies For Employee Retention Credit 2021?
One thing that you need to know about the Cares Act Employee Retention Credit (ERC) is that almost all businesses qualify. Yes, you read that correctly.
Here are six of the most common myths regarding the CARES Act Employee Retention Credit (ERC):
You Don’t Qualify If You Received The PPP
This is just a myth and nothing else. PPP stands for Paycheck Protection Program that allows different businesses to also receive the ERC. One thing that should be considered is that the employers can only use the ERC in the wages that have not been paid for during the PPP process.
You Are An Essential Business
Again, this is not true. The ERC is not there to differentiate between essential and non-essential businesses. Not at all. The essential business needs to meet the same requirements that are set for the non-essential businesses. It means that the business should be partially or non-partially suspended due to the government order or the gross receipts should have been below 20% during the entire year.
Your Business Stayed Open
This one is another misconception that most businesses have. The requirements are the same as mentioned above and your business would qualify under the same terms. Any change in the business operations at all. This even includes changes and extra costs for the cleaning and sanitizing during the coronavirus that all businesses had to do.
Gross Receipts Not Down At Least 20%
If you feel that your gross receipts are not less than 20% and your business does not qualify, you are again mistaken. There is not a single business that has not suffered the consequences of the COVID-19 virus. This means that most businesses qualify, regardless of what they made through the year.
Your Business Made A Profit In 2020
There are many cases where businesses qualify for this ERC despite making a profit in 2020. These businesses include grocery stores, manufacturing and logistics companies to name a few. The pandemic is enough reason for your business to qualify.
Your Business Is A Non-Profit
It does not matter if you are a non-profit organization that does not pay any taxes. You still qualify. Unlike in the previous years, the past two years have been tough on many schools, counseling centers, NGOs and churches that were either partially closed or completely shut down, due to the restrictions of the government in light of the pandemic.
If the above-mentioned misconceptions were stopping you, do not let them anymore because your business qualifies if you fall in these categories. Another thing about the CARES Act Employee Retention Credit (ERC) is that there is no public disclosure like in the case of PPP loans. This is because it is a federal tax. All your information will be kept private.
