Common Misconceptions About the Employee Retention Credit

August 7, 2023
Dayes Law Firm

There are a lot of myths floating around about the Employee Retention Tax Credit (ERTC/ERC) that make it even more confusing for business owners trying to decide whether or not to apply for it. To try to clear up some of the confusion, here are some of the most common misconceptions about the Employee Retention Credit, to answer some of your burning questions. 

However, each business is different, and has different needs when it comes to tax credits. If you’ve got a specific question about the ERC in regards to claiming the credit for your business, please feel free to reach out to Dayes Law Firm for a free consultation today!

Claiming the ERC and PPP

Some business owners may mistakenly believe they can’t claim the ERC if they’ve already taken a Paycheck Protection Program (PPP) loan. While this was initially true, it is no longer the case. 

As long as you know which funds are included as eligible wages for the ERC and which are not after a PPP loan was calculated into the equation, you should be able to utilize both for your business. Provided you don’t use the same wages for both, also known as “double-dipping,” your business can take advantage of both. But if you really want to be sure, contact a trusted tax professional for help with this. 

Business Shutdowns 

If your business didn’t totally shut down during the COVID-19 pandemic, it may still qualify to claim the Employee Retention Credit. A partial suspension order for your business by the government could potentially still qualify. 

If a partial shutdown resulted in a more than nominal impact on your business operations, your business may be permitted to apply for the ERC. Again, this is something tax professionals like the ones at Dayes Law Firm could help you sort out if needed. 

Essential Businesses and the ERC

You might mistakenly believe that your business can’t claim the ERC because it was deemed essential during the pandemic. But even essential businesses faced tough financial prospects during the height of COVID-19 and dealt with concerns like supply chain issues and other problems in 2020 and 2021. 

The ERC is available to eligible employers for wages paid from March 13, 2020, through December 31, 2021. If your business was essential but operated with challenges during that period, it may still qualify. 

ERC for Charities

Churches, non-profit hospitals, and other charities may qualify for the Employee Retention Credit. Non-profit employers are eligible under certain conditions, and Dayes Law Firm can help you determine if your organization can claim the ERC. 

ERC Refund Amounts 

Some of the advertisements about the ERC may make it seem like every business owner can get up to $26,000 per employee, but that simply isn’t true.

$26,000 is the maximum amount some businesses may be able to claim for each employee, provided all eligibility requirements are met. Getting an experienced ERC team involved to help you with your ERC application can help you better understand what sort of ERC refund you can really expect to see when all is said and done. 

How Dayes Law Firm Can Help 

The team at Dayes Law Firm can help you get the process of claiming the ERC started and help you sort through all the common misconceptions about the Employee Retention Credit. Our ERC team can answer any questions you may have about the tax credit and with specific inquiries about your business’s eligibility. 

Please contact us to see how we can help you and your business with your ERC needs today! You can give us a call at 602-888-2900 or fill out the form on this page to get in touch. Someone from our team will reach out shortly, and we look forward to helping you see every dollar your business is entitled to through the ERC program!