There is money on the table for new businesses during the pandemic. Its called recovery startup business erc aka Employee Retention Credit.
If you launched a business just before the pandemic or perhaps while it was going on, we’re sorry for the loss you might have faced. Congratulations on reaching a significant milestone during such a challenging period.
Here’s some good news: if you weren’t eligible for any government stimulus assistance in the past (such as Pay Protection Program or Economic Injury Disaster Loans), the ERC is one credit you may be entitled to so let’s see what we can do.
Overview of the Employee Retention Tax Credit (ERTC)
The Employee Retention Tax Credit (included in the CARES Act) is a refundable tax credit from the Internal Revenue Service (IRS) that may be claimed against qualifying payroll taxes in 2020 and 2021. In a nutshell, ERTC is a financing program from the government intended to assist small and medium-sized business owners like yourself in navigating the economic effects of the pandemic.
Recovery Startup Business ERC: Do a business qualify?
As a result of the American Rescue and Reinvestment Plan Act, newly established businesses that started operations during the pandemic are now qualified to apply for government support under the Recovery Startup Business Employee Retention Credit category.
For the ERC, a Recovery Startup Company is defined as a business that commenced operations on or after February 15, 2020, and its average annual gross revenues do not exceed $1 million. If this sounds like your business, continue reading.
Qualification for Recovery Startup Business ERC
Employee Retention Tax Credit is a one-in-a-lifetime opportunity for start-up businesses, but getting so may be exceedingly complex.
Although there are fixed criteria for small businesses to qualify for ERTC, the good news is that there are more options for companies that started operations during the pandemic.
Recovery Startup Business requirement eligibility for the ERTC:
- You must have at least one employee other than 50% owners/family members.
- You must be a start-up business that began operations on February 15, 2020, or later.
- You must have annual gross receipts of less than one million dollars for 2020 and 2021.
- You must have paid your employees during the third and fourth quarters of 2021.
Under the new regulations, start-up businesses that opened doors on or after February 15, 2020, and have annual revenues of less than one million dollars are eligible for the ERTC even though there are almost no requirements to meet to qualify for the credit. With that said, let’s get into the nitty-gritty of recovery start-up business ERTC.
If you have questions or need assistance with the Employee Retention Credit process, please contact FTCO ERC for a complementary ERC Evaluation.
Revised ERC Guidelines for Recovery Start-Up Businesses
Regarding the ERC, you’ll be unable to claim the recovery start-up credit for either the remaining quarters of 2020 or any of the first two quarters of 2021. However, according to revised guidelines, recovery start-up businesses can claim the credit for 2020 and 2021, provided they meet the eligibility criteria of a plunge in revenue or a limitation imposed by the government.
Value of the ERTC for Recovery Start-Up Businesses
The money paid out to employees is directly proportional to the Employee Retention Credit value. The ERC is equal to fifty percent of qualifying wages, up to a maximum of $10,000 in 2021, implying that you’re eligible for up to $5,000 annual bonuses for each employee.
The credit equals up to 70 percent of the qualified wages, with a cap of $10,000 each quarter in 2021, indicating that you may be eligible for up to $28,000 in bonus money for each employee in 2021.
ERTC Limitations for Recovery Start-Up Businesses
The total amount of credits that recovery start-up businesses may claim in a quarter is capped at $50,000., affecting the third and fourth quarters of the game. However, the limit for the third quarter depends on how you qualify for the credit. Regarding credits for the fourth quarter, you may only claim a maximum of $50,000. Nevertheless, if your company is eligible due to a reduction in gross revenues or a suspension of operations, you may claim up to $7,000 in lost wages for each employee.
How to Apply for ERC Recovery Startup Business
To apply for the ERC start-up business, you’ll need to change your previous tax returns. To begin, look at the requirements to see whether your company meets the qualifications for the ERTC for any of the quarters in 2020 or 2021.
The next step is to locate the employer tax return for payroll submitted for that particular quarter and submit form 941-X to modify the tax return.
Value of Using an Employee Retention Credit Expert
Since you only need to make specific changes to your previous payroll tax filings, claiming recovery start-up business ERTC doesn’t sound complex. However, the reality is quite the opposite.
Many accountants refuse to handle the intricacies of the ERC program. This program can be complicated even for most seasoned tax experts. Thus, joining hands with an ERTC expert is your best bet.
Recovery Startup Business ERC Assistance
FTCO ERC was established to assist businesses in claiming the Employee Retention Tax Credit. Over the years, we’ve helped numerous companies with the ERTC process.
Our goal is to ensure that all our clients get the maximum credit. So, what are you waiting for?
Don’t miss out on this incredible opportunity, and begin your ERTC process today. To check your eligibility, complete this eligibility form today!
Recovery startup business ERC calculation
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