The Employee Retention Credit (ERC) is a tax credit introduced by the U.S. government in response to the COVID-19 pandemic. Its purpose is to incentivize employers to retain their employees during challenging economic conditions.
The ERC program is designed to assist businesses in three primary ways. Firstly, it provides support for recovering from the economic shutdown caused by COVID-19. Secondly, it helps compensate for lost revenue and third, it enables businesses to continue their operations while retaining their employees. Although the program officially ended in 2021, organizations can still apply to receive funds. It is important to note that many businesses qualify for the ERC but may not be aware of their eligibility.
There are four main criteria for qualifying for the ERC. First, your business must have experienced decreased revenue due to COVID-19 in 2020 and 2021. Second, your business must operate within the United States, regardless of its size. Third, your business must have undergone a full or partial shutdown mandated by authorities, which limited business hours, reduced services, or implemented social distancing measures. Lastly, if your business qualified as a recovery startup business in the third or fourth quarter of 2021.
