If you’re like most business owners, your inbox has been flooded lately with emails about filing for Employee Retention Credits (aka ERC). And if all those unsolicited emails went straight to your trash folder, you’re not alone.

But here’s the deal…you may be leaving (free) money on the table. So here’s what you need to know.

What is an Employee Retention Credit (ERC)?

The Employee Retention Credit, or ERC, is a stimulus program that was released with the CARES Act in March 2020 at the same time as the PPP (Paycheck Protection Program). In short, it is a cash credit that was intended to incentivize businesses to retain and continue paying their employees through the COVID-19 pandemic. While virtually every small or medium business is familiar with the PPP, a surprising number of companies have not heard of the ERC.

Initially, companies were only allowed to choose either the PPP or the ERC, but not both. When the CARES Act was originally released in March 2020, the PPP was generally chosen over the ERC by most businesses for the following reasons:

1. The PPP was much easier to understand and compute. Businesses were fairly certain they’d be able to get a dollar-for-dollar benefit for the PPP, while the ERC only appeared to provide a benefit of 50 cents on the dollar, at most.

2. The PPP usually resulted in cash funding in April/May of 2020, while the ERC could take months to obtain.

But then in December 2020, the rules were changed! The eligibility under the Program was expanded dramatically, allowing small business owners access to the benefits under the ERC, even if they took PPP 1 or PPP 2!

Under the ERC, Uncle Sam rebates you for wages paid to each employee you retained during times your business was being affected by COVID. The total value of the rebate is 50% on up to $10,000 in wages in 2020 – or $5,000 total per employee in 2020 – plus 70% on $10,000 in wages per quarter for the first three quarters in 2021 – or $21,000 total per employee in 2021. This adds up to a huge amount of money – $26,000 total per employee!

That’s a significant amount of money for any small business, which is why you need to keep reading!

Do you qualify for the ERC?

There are two basic tests the IRS reviews to determine if you qualify. If you meet either of them, you qualify.

Test 1: Substantial decline in gross receipts

• If your gross receipts declined by 50% or more when comparing any quarter in 2020 to the equivalent quarter in 2019, you qualify.

• If your gross receipts declined by 20% or more when comparing any quarter in 2021 to the equivalent quarter in 2019, you qualify.

Test 2: Full or partial suspension of business operations

The government asks "Did a governmental order more than nominally impact a more than nominal portion of your business?”

The question you should ask yourself is “Was your company’s ability to provide goods or services restricted or modified by a COVID executive order?”

If so, would your company have been able to provide 10% in additional goods or services if such COVID executive orders were never enacted to a 10% portion of your business? If the answer is yes, you are most likely eligible.

This is where a lot of confusion around qualifying has occurred, including with accountants who (inadvertently) misinterpret Test 2!

So how do you get these ERC Credits?

While you can file for the ERC on your own, we’re finding most business owners prefer to turn this laborious task over to someone else. We have been speaking with a firm that has been advising us on this, as well as many of our clients. The firm, EZ-ERC, is a team of Tax Partners from EY, KPMG, and the Big 4. Their attorneys are DLA Piper which is the law firm that drafted the legislation for this credit with Congress. So they’re true experts in this area!

What will EZ-ERC do for your business?

EZ-ERC will provide you full ERC services, including filing and claiming your Employee Retention Credit from the IRS. For those that qualify and wish to receive cash fast, they can even arrange for an advance payment of up to 70% of your total credit within as little as 3 – 4 weeks!

Through their process they will collect all the data to evaluate your eligibility and then perform detailed and complex computations to determine your ERC. Through sophisticated analysis and reporting, they are able to maximize the ERC for clients by carefully selecting how certain wages are treated for PPP versus ERC purposes at the employee level as well as understanding the nuances of a complex tax code.

They deliver a +10-page report documenting your eligibility as well as the results from their proprietary EZ-ERC calculator that supports the numbers used to claim your credit. They then prepare any amended payroll tax returns, Form 941-X(s), and file your ERC claim with the IRS.

And when that work is done, they commit to helping you in the future in case there are questions about how you arrived at your IRS filing.

Curious if you qualify for the Employee Retention Credits?

Just answer a few questions on the EZ-ERC website. They review your information & schedule a call to discuss next steps. It’s that easy :)