Frequently Asked Questions

Below are some commonly asked questions. If you have any additional inquiries, don’t hesitate to reach out to us.

1. What is a Recovery Startup Business?

A Recovery Startup Business is a company that began its operations after February 15, 2020. It also has an average annual gross income of not more than $1 million. These businesses are unique, because they don’t need to meet the requirements of a full or partial suspension of operations. Or, a significant decline in gross receipts, to qualify for the ERC.

2. Is the ERC Available for Self-Employed Individuals?

Self-employed individuals, are not eligible to claim the Employee Retention Credit (ERC) for their own compensation. However, they can claim the credit for wages they pay to their employees, if any.

3. How Quickly Will I Receive the Credit?

The Internal Revenue Service (IRS), aims to process ERC claims as swiftly as possible. However, the processing time can vary depending on various factors. For instance, the volume of applications etc.

4. What if I Have More Than One Business?

If you own multiple businesses, it’s important to know that each business entity is considered separately when calculating the ERC. Each entity must meet the eligibility criteria independently.

5. Are Non-Profits Eligible for the ERC?

Yes, non-profit organizations can also benefit from the ERC. The eligibility conditions for non-profits, are generally similar to those for profit businesses.

6. Are Government Entities Eligible?

Most government organizations are not eligible for the ERC. However, public colleges and universities are exceptions and can qualify for the credit.

7. How Do I Claim the ERC?

To claim the ERC, employers need to file specific IRS forms with their tax return. Or, amend a previously submitted return. Authorized agents with a valid Power of Attorney, can also file claims on behalf of the employer.

8. Can the ERC Be Combined with the Paycheck Protection Program (PPP)?

Initially, businesses that received PPP loans were ineligible for the ERC. However, the Consolidated Appropriations Act of 2021 changed this. Allowing companies to apply for the ERC retroactively to 2020. Note, that wages paid with forgiven PPP funds cannot be used for the ERC.

9. Is the ERC Only Applicable to U.S. Businesses?

Yes, the ERC is exclusive to businesses that operate within the United States. It is also administered by the IRS.

10. Are Seasonal Workers Included?

Seasonal employees can be included in the ERC calculations, if they meet the necessary eligibility requirements.

11. Is the ERC Taxable?

The ERC is not taxable income; it serves as a credit against federal employment taxes.

12. What Are “Qualified Wages”?

Qualified wages, are those paid during periods, when the business was either partially or fully shut down. As a result of government mandates or during times of significant revenue loss. This also includes qualified healthcare costs, related to such wages.

13. Can I Claim the ERC Retroactively?

Yes. You can amend prior tax returns to include the ERC, if you initially didn’t claim it.

14. What Records Should I Keep?

To validate your ERC claim. You should maintain records of; employment taxes, financial statements and wage records for each employee.

15. How Does the ERC Affect Other Tax Credits?

The ERC can be claimed alongside other tax credits like the Work Opportunity Tax Credit (WOTC). However, wages used for one cannot be used for the other.

16. Are Franchises Eligible for the ERC?

Franchises can be eligible for the ERC, provided they meet all the relevant criteria for eligibility.

17. Can I Use a Third-Party Service for the ERC Application?

Yes, third-party services can assist with the ERC application process. From determining eligibility, to connecting you with professionals who can handle the claim. ^{(1, 2, 3, 4)}