Can a Startup Business Qualify for the ERTC?

August 4, 2023
Dayes Law Firm

If your business started operations during the first months of the COVID-19 pandemic, you might be wondering whether or not a startup business qualifies for the Employee Retention Tax Credit (ERTC). In fact, there are special rules for businesses like this that are trying to claim the ERTC

Startup Businesses and the ERTC

If your recovery startup business began operating after February 15, 2020, it may qualify to claim the ERTC

Generally, employers are qualified to apply for the ERTC for tax year 2020 if their business experienced either a full or partial suspension of the operation of their business during any quarter that year due to government orders restricting specific activities, or if the business had a substantial drop in gross receipts by more than 50 percent as compared to the same quarter from the previous year. 

Alternatively, if a business experienced a reduction in gross receipts in the first, second, or third calendar quarter in 2021 (if those receipts are less than 80 percent of the gross receipts in the same calendar quarter for 2019), it may be able to apply.

But it’s possible your new business could be eligible to apply for the Employee Retention Tax Credit for the fourth credit of 2021. In fact, recovery startup businesses are the only businesses that can qualify for the credit for that quarter. 

ERC and Startup Business Qualifications

Notably, the maximum ERTC for 2020 is $5,000 per employee for the year for most businesses, while the maximum credit for 2021 is $7,000 per employee per quarter. 

But businesses that claim the credit as a recovery start-up business can only claim a maximum of $50,000 per quarter. Any tax professional you work with to apply for the ERTC should know and understand this distinction for startup businesses. 

The Employee Retention Tax Credit can be a major financial support to recovery startup businesses. Starting a business is tough enough, but starting one during a time of economic uncertainty is even harder. 

But you’ll want to be sure you actually qualify to apply for the ERTC and know the specific rules around claiming the credit as a startup business. That’s one way a skilled ERTC team like the one at Dayes Law Firm may be able to help. 

Dayes Law Firm and the ERTC

Dayes Law Firm and its partners have comprehensive experience when it comes to assisting businesses with claiming the Employee Retention Tax Credit. Our team has already helped other businesses in filing for more than $250 million in refunds. We are confident we can help you apply on behalf of your startup business as well. 

Please don’t hesitate to give our team a call or fill out the form on this page to get in touch. We can offer a free, no-obligation consultation to discuss your unique ERTC business needs

Contact us today to see how the team at Dayes Law Firm can help you and your startup business with anything you might need regarding the Employee Retention Tax Credit. We hope to hear from you soon!