How COVID-19 and the Employee Retention Credit Affected the Construction Industry
Construction companies are meant to build. But it’s tough to build your construction company when COVID has limited your business.
COVID-19 had catastrophic financial impacts on businesses all over the world. In fact, the United States Census Bureau reported that “In 2020, the coronavirus pandemic impacted the payroll of 45.3% of companies with employees.”
As you might know, the construction industry was hit particularly hard. A survey conducted [D&G1] during the height of the pandemic revealed that 60% of responding construction firms reported having at least one future project postponed or canceled due to the coronavirus while 33% reported having projects that were already underway halted because of the pandemic.
With the help of Innovation Refunds, many eligible businesses within the construction industry have claimed the Employee Retention Credit (ERC) to help rebuild their companies.
What is the ERC?
The ERC is a payroll tax refund that helps eligible businesses receive up to $26,000 per employee kept on payroll during the pandemic. It’s designed to help qualifying businesses that, in part, retained existing employees during 2020 and 2021.
Originally, the ERC was not accessible for businesses that took part in PPP funding. But the ERC has undergone expansion and under new rules, eligible businesses can claim the ERC and PPP.
The Impact of COVID-19 on the Construction Industry
The impact of COVID-19 was so severe on construction companies that even whole states, such as Washington, ordered limitations and, in some cases, complete stops of non-essential construction jobs. Furthermore, set construction contracts had to be stalled, which led to many construction companies being idle without work.
Here were some of the main issues the construction industry faced due to the pandemic.
1. Supply chain and material shortages
Supply chain issues were seen across industries but impacted construction companies more than others. Combined with a shortage of available containers and bulk carriers, reduced port and warehouse staffing led to major delays in material deliveries. Sourcing raw materials even became difficult as suppliers were also facing staffing issues.
In fact, it was reported that [D&G2] a record number of builders have declared material shortages, with more than 90% of builders reporting shortages of appliances, framing lumber, and oriented strand board (OSB).
2. Reduced staffing, increased demand
Because of the reduced hours and staggered schedules for employees, the pandemic presented a new problem for construction companies: an upward spike in housing construction. Construction businesses struggled to build new homes due to having fewer employees and hours to accommodate this demand.
3. Remote work and less unified teams
Since construction companies had to rework schedules and cut down on hours, the increase in remote work was implemented for their admin teams to help meet the increased demands of construction projects. This led to siloed teams and mistakes due to a reduction in effective collaboration.
4. Industry value drop-off
In the United States, the commercial construction industry accumulated millions of dollars in losses. As a result of such economic damage, many construction companies were left wondering what the future had in store for their business.
Fortunately, many construction businesses turned to Innovation Refunds to help them construct a new future — one with success and sustainable operations.
Did You Experience ‘Limited Commerce’?
Many construction sectors were considered essential from March 13, 2020 to September 30, 2021. Therefore, they may not meet the criteria for a large reduction in gross receipts and fully suspended operations.
However, businesses that experienced partially suspended operations due to a government mandate may qualify for the ERC under something called ‘Limited Commerce’.
Limited commerce refers to a partial suspension of business operations due to a government order. A partial suspension has occurred if:
● More than a nominal portion of business operations was suspended
● Government order significantly affected operation
With your help, our independent tax professionals will determine if your business can file for the ERC under limited commerce. Innovation Refunds does not provide tax or legal advice.
Construction companies may qualify due to:
● Supply chain disruptions
● Disruptions beyond revenue
● Hazard pay or wage increases
The ERC for the Construction Industry
ERC refunds are a great way to pump money back into vital company efforts, like paying debts, operating expenses, hiring and retaining employees, and ultimately growing your business!
For construction companies, that might mean allocating cash to labor costs, financial relief due to significant revenue decline, or purchasing new equipment.
How Innovation Refunds Helped Eligible Construction Companies Recover
With the help of Innovation Refunds, qualifying businesses in the construction industry received millions of dollar[D&G4] s in payroll tax refunds through the Employee Retention Credit program.
Innovation Refunds (IR)’s team of independent tax professionals have helped over 163 construction companies get the ERC refund they were eligible for.
One example of a successful ERC filing facilitated by IR is Scott Winter Construction. This company received over $1.3 million in payroll tax refund after qualifying for Employee Retention Tax Credit assistance.[D&G5]
Our experienced team of independent tax professionals can help eligible companies receive its ERC refund as seamlessly as possible.
The construction industry has recovered tremendously and is now expected to grow by 6% by the end of next 2024. Your business could also grow if you have additional cash from your ERC refund to invest in your operations.
To learn more about typical refund amounts, check out The ERC & Innovation Refunds by the Numbers.
Working With an ERC Company
IR has helped businesses across all industries claim over $5 billion. If eligible, our independent network of tax professionals provide:
● Guidance regarding documentation
● Assistance through the entire application process
Additionally, our independent team will work with you to secure your business’ refund based on eligibility and compliance. But don’t just take our word for it, here’s what some of our clients have said about working with us:
“Talk about having our best interests in mind. Talk about being quick and efficient. Some do just ‘talk about it’ but IR actually DOES it.”
- Daniel MacLeith, President of Pacific Westline, Inc.
“Throughout the entire process, they kept every commitment and hit every timeframe estimate they gave me. Innovation Refunds has done an amazing job, and I’m beyond grateful for what this means to my company and my family.”
- Ammon Petersen, Owner of ABP Electrical. Received $1,636, 561 in payroll tax refunds with help from IR.
Start your Employee Retention Tax Credit Journey with IR
Depending on if your company qualified for quarters in 2020 or 2021, we recommend that you begin your application process as soon as the rules and deadlines could change as they have done in the past.
If eligible, work directly with the customer success team for assistance through the entire ERC application and submission process.
It takes around 8 minutes to determine whether your business may qualify for Employee Retention Credit assistance.