How to Know If Your Small Business Meets ERTC Qualifications

With 2020 and 2021 now in the rearview mirror, you may be wondering if your business is eligible for the Employee Retention Tax Credit (ERTC), also known as Employee Retention Tax Credit (ERTC). Many business owners may feel they:

  • Don’t meet ERTC eligibility
  • Don’t have the necessary documents
  • Need help applying for the ERTC

At Innovation Refunds, we’re here to help demystify the ERC so your company can get back the capital it may be eligible to receive. Read on to learn more about the program and its criteria for businesses. 

What’s the ERTC Program and What Qualifies a Company for Eligibility? 

Employee Retention Tax Credit offers assistance through payroll tax refunds to help eligible small to medium-sized businesses that were impacted by the COVID-19 pandemic.

There were a number of changes and amendments related to the legislation around small business eligibility, making it difficult for business owners to navigate the program on their own. 

ERTC legislation was designed to give eligible businesses up to $26,000 per employee kept on payroll during COVID-19 through a payroll tax refund. The vague language may have left you wondering if your company is eligible, so we’re here to help provide some clarity.

The eligibility criteria for both years includes a complete or partial shutdown requirement to show that your business was affected by the pandemic. 

The partial shutdown qualification means that your business needs to have more than a 10% negative impact in sales, travel, group meetings, products delivered from affected suppliers, or simply in hours of operation. 

Since most small businesses had a greater than 10% negative impact during the pandemic, it’s worth consulting with an ERC originator to find out if your business may be eligible. 

Below, we’ll discuss the criteria required to qualify for the 2020 and 2021 ERC. 

2020 ERTC criteria

  • Your maximum full-time employee count on your payroll in 2019 was less than 100.
  • You kept your employees onpayroll.
  • Your business was affected in the following ways:
  • Your company completely or partially shut down for any quarter in 2020 due to a government order. 
  • You suffered a 50% or greater reduction in gross receipts for any quarter in 2020 when compared to the same quarter in 2019.

2021 ERC criteria

  • Your maximum full-time employee count on your payroll in 2019 was less than 500.
  • You kept employees on your payroll.
  • Your business was affected in the following ways:
  • Your company completely or partially shut down for any quarter in 2021 due to a government order. You suffered a 20% or greater reduction in gross receipts for any quarter in 2021 when compared to the same quarter in 2019.

Necessary Documentation for the ERTC Program

Now that you know what qualifies a company for the ERC, the next step is applying and getting your business’ application approved. For this, you need to gather all of the following required documentation:

ERC claims filed through the IRS

It may take a while to file with the IRS because you must be sure you’ve calculated your refunds correctly and checked that all papers are completed correctly . Your business’ claim will be submitted in about four to six weeks if you engage with our tax professionals here at Innovation Refunds. Throughout this process, Innovation Refunds offers benefits including no upfront fees, a dedicated refund specialist, and guaranteed audit protection.

It may take about six to nine months to process your company’s ERC documents and deliver its refund. Additionally, some common delays that are causing long wait times are:

  • The IRS continues to work with antiquated computers and software.
  • The massive influx of refund requests.
  • Lack of IRS personnel to handle inquiries.

Fortunately, the IRS has stated that it will be expanding its workforce, which should help expedite the procedure in the near future.

Hire highly qualified tax professionals when applying for the ERTC Program

Applying for the ERC can be a complex process, especially when considering all of the documentation and criteria behind ERC qualifications. AtInnovation Refunds, we work hard to help make the process as easy as possible so your business gets the capital it’s eligible to receive. All you need to do is fill out our intake form to find out if your company is eligible to work with us. 

At Innovation Refunds, our network of tax attorneys, CPAs, and tax professionals review all submitted documentation to help make sure it complies with IRS and ERTC requirements. When working with them, you can expect:

  • Consistent communication while your assigned refund specialist is handling your company’s claim
  • We’ll file your business’ ERTC claim on your behalf
  • Comprehensive service from start to finish so no detail is missed in your company’s ERTC claim. 

Our business is helping your business 

COVID-19 caused major issues for many small and medium-sized companies across the U.S.. That’s why at Innovation Refunds, we aim to help every eligible business apply for the ERC before the deadline in 2024. 

When you work with Innovation Refunds, our team of refund specialists, tax attorneys, and lawyers can help your business apply for the ERC so you can get back to running and growing your company. 

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