Can the ERTC Be Used to Fund New Product Development?

December 4, 2023
Dayes Law Firm

One of the questions business owners who haven’t yet claimed the Employee Retention Tax Credit (ERTC/ERC) may have is what the funds they receive from the program can be used for. Are there limitations on it, like there are for Paycheck Protection Program (PPP) loans? Can ERTC money be used for specific need areas, like funding new product development?

Can the ERTC Be Used for New Product Development Funding?

The Employee Retention Tax Credit incentivized business owners to keep employees on their payroll during the height of the COVID-19 pandemic by offering a refundable tax credit. Eligible employers can claim the ERTC with Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. 

Through the ERTC, businesses may be able to receive a refund of up to $26,000 per employee for eligibility periods in 2020 and 2021. That’s a serious amount of money that could really help any business, but especially small businesses, to bounce back after the financial turmoil of the pandemic. 

But what can that money be used for? Specifically, can it be used for new product development funding? 

As an employer, you can put the money you may receive from the ERTC program back into your business in many ways. You could use it to pay off debts you incurred during the pandemic or to hire new employees to expand your business. Or, you could fund new benefits for the employees who stuck around, or offer them raises and bonuses. 

And yes, you can use the Employee Retention Tax Credit to fund new product development! The ERTC could help your business offer new products and services, which could help it expand into new markets and product lines. 

All of the research and development that goes into new products in the first place can be very pricey, and then actually producing those new items is an additional cost. With the ERTC, a good chunk of that expense, if not all of it, could be covered. This is just one of the areas in which the tax credit could significantly impact your business if you choose to apply for it. 

Dayes Law Firm Provides ERTC Application Assistance 

If you’ve been looking into applying for the ERTC but just haven’t pulled the trigger yet because it seems like a lot of work, that’s completely understandable. Business owners already have a lot to deal with, and the particulars of applying for the ERTC can be time-consuming. 

What you might want to do is work with a team of tax professionals to get your application done and turned in to the IRS. At Dayes Law Firm, our team and our partners have already helped hundreds of business owners file for the tax credit, and we’d be more than happy to assist you, too. 

Please contact us today to learn more about our ERTC services and how we can help you and your business. We offer a free, no-obligation consultation to discuss any questions or concerns you may have, and we can walk you through the application process and exactly how our firm can help you turn in the strongest possible Employee Retention Tax Credit application to the IRS.
Feel free to give us a call at (800) 503-2000 to find out why so many business owners have already worked with Dayes Law Firm to complete their ERTC applications!