It’s a common belief that you have to suffer a loss of revenue to be able to get the ERC. But is that always true?
To be honest, just after ERC was implemented under the CARES Act in March 2020, it has been very difficult for small businesses to qualify for ERC. The procedure of claiming the Employee Retention Credit was just complicated for most people to try. However, the federal government has made some changes to the eligibility criteria and application procedure to provide the opportunity for more businesses to claim ERC. However, the procedure of claiming ERC can still be daunting for most people, so it would be better to Get help filing for ERC from ERC specialists.
The ERC specialists help businesses in reducing their tax burden and optimize the benefit of ERC by reviewing their eligibility for ERC. So, if you are eligible for the ERC, then ask them to help you in claiming it. However, you essentially don’t have to experience a loss of revenue to qualify for ERC.
We will see into different criteria that will help you in qualifying for the ERC claim.
Reduction of revenue
According to IRS, you are eligible for ERC if your business is suffering from a loss of revenue from your operations since COVID. To qualify ERC with this criterion, your company’s revenue should be lower than that of 2019, that means before the pandemic hit the businesses. In other words, your company’s yearly or quarterly revenue in 2020 or 2021 should be less than that of the respective quarter of 2019 or 2019 as a whole.
Supply chain disruptions
If your company was affected by large-scale supply chain disruptions, then you are eligible for ERC. The disruption should be from the pandemic and large impact on the system’s functionality. You should verify your business disruption by the large-scale disruption because there are many other factors that can cause business disruption, and it may not be eligible for ERC.
A partial or complete shutdown
You are eligible for ERC if your business was partially or completely shut down over the pandemic. To qualify for ERC under this criterion, your company must have been just partially or completely shut down over the pandemic, and it should be a temporary shock to your business.
You can be qualified for ERC if your company had to undergo any of the circumstances mentioned above due to COVID or government-imposed COVID restrictions. However, your company doesn’t essentially have a loss of revenue to qualify for ERC.