Can ERTC Help Businesses in Rural or Underserved Communities?

October 25, 2023
Dayes Law Firm

There may still be some confusion among business owners who haven’t yet claimed the Employee Retention Tax Credit (ERTC/ERC) about what the tax credit can be used for and who exactly is allowed to apply for it. For instance, employers in rural or underserved communities may not be sure if they qualify or if it is meant for larger businesses. 

Utilizing ERTC to Support Businesses in Rural or Underserved Communities

The ERTC program was implemented in 2020 to support small businesses during the early months of the COVID-19 pandemic. It is a refundable payroll tax credit certain businesses can claim on qualified wages paid to their employees if they kept staff on their payroll despite major financial setbacks in 2020 and 2021. 

Employers that experienced either a full or partial shutdown of operations due to a governmental order related to COVID-19, or businesses that experienced a decline in gross receipts in 2020 or 2021 when compared to the same quarter in 2019, may be able to apply for the ERTC.

There are some differences in how the ERTC can be claimed based on whether an employer is a large or small business. When claiming for quarters in 2020, an employer with 100 or fewer average full-time employees is defined as a small employer. For 2021, an employer with 500 or fewer full-time employees is considered a small employer.

This distinction may be important to businesses in rural or underserved communities where there may be more “mom-and-pop” shops operating rather than larger businesses. These small employers are actually at a bit of an advantage when it comes to figuring out ERTC-qualified wages.

Most large employers can only file for wages paid to employees who were not working. However, small businesses can claim Employee Retention Tax Credits for wages paid to all employees. This could better support businesses in rural or underserved communities that may have more small businesses, which could be struggling to stay open particularly in the wake of the financial challenges that COVID-19 presented. 

Businesses That Can Claim the ERTC

If the COVID-19 pandemic impacted your business, it may qualify to apply for the ERTC. Restaurants, bars, daycares, hotels, gyms, and more may all be eligible to claim the tax credit. 

Businesses of those types and many more obviously exist in rural and underserved communities and are likely to struggle more financially than large businesses and corporations. Your business could potentially claim up to $26,000 per employee, which is not an insignificant amount of money for businesses in communities that may desperately need that sort of financial support. 

The ERTC can be used to support those businesses because it can be used for whatever the employer needs to use it for! It is not a loan and does not need to be paid back. When it comes to businesses in underserved communities that get little other support, a sudden influx of ERTC funds could make all the difference between staying open or not. 

How Dayes Law Firm Can Help

If you’re not sure if your business qualifies to claim the Employee Retention Tax Credit, Dayes Law Firm can help. Our team would be happy to answer any questions you may have about the ERTC in a free, no-obligation consultation, and we are especially happy to help small businesses that are often overlooked.

Please contact us at (800) 503-2000 to learn more. We hope to hear from you soon!