Crisis Toolkit: Integrating the ERTC into Business Resilience

October 10, 2023
Dayes Law Firm

When the COVID-19 pandemic hit, many businesses were unprepared. After all, who could have predicted such a catastrophe? As a business owner, operating in 2020 and 2021 probably taught you that business is unpredictable. There are some crises you can’t foresee. However, that doesn’t mean you can’t prepare for them.

The government introduced the Employee Retention Tax Credit (ERTC) to assist struggling businesses during the pandemic. This was a time of economic distress for businesses that led to many shutdowns. The ERTC provided the boost many needed to stay open and keep employees on payrolls. 

What Is the ERTC? 

The Employee Retention Tax Credit is a refundable tax credit that rewards business owners for retaining employees during 2020 and 2021. It refunds employers a percentage of employee wages for each quarter during which they saw a significant loss in gross revenue in 2020. 

The ERTC for businesses applies to 2020 and the first three quarters of 2021, but you can still retroactively file using Form 941-X. You have until April 2024 to claim the wages you paid employees in 2020 and until April 2025 to claim the wages you paid employees in 2021. 

What Is Business Resilience?

Business resilience includes your business’s ability to combat and recover from disasters like COVID-19. As a business owner, you face unexpected obstacles nearly every day. However, when there is a problem on a larger scale, you need to have a plan in place. 

That’s where a crisis management toolkit comes in handy. A business resilience toolkit will help you remain calm during a crisis and will help your business stay afloat. For example, COVID-19 led to many nonessential businesses shutting down in response to government mandates. Businesses without crisis management toolkits likely suffered more than those who prepared for emergencies. 

How to Integrate the ERTC into Business Resilience

So, what do these two things have to do with each other? 

The ERTC originally helped businesses in crisis during COVID-19. However, now that you can file retroactively, you can use those funds however you like. Tax credit integration into crisis management toolkits is an excellent strategy for building business resilience.

Determine Eligibility

First, you must determine whether you are eligible for the ERTC. Qualification criteria rely on the gross receipts test and the suspension of operations test. You must prove your revenue declined by 50% in 2020 or 20% in 2021. 

Alternatively, you may qualify if your business had to partially or fully shut down due to a government mandate during the pandemic. 

Avoid Fraud

Unfortunately, with the introduction of this credit came many scammers looking to take advantage of small businesses. People claiming to be ERTC providers will offer to help you qualify, even if you don’t. Some red flags to look out for include: 

  • Claims of earning $26,000 per employee
  • Claims of qualifying based on wearing masks 
  • Claims of free government money 

Claim and Utilize Benefits With a Tax Attorney

The process of claiming the ERTC can be complex. A trusted tax attorney will help you navigate the process to ensure you’re maximizing your benefits. Once you have your funds, you can use them to invest in your crisis management toolkit. This is especially useful in terms of recovery for startup businesses. You’re using one crisis to prevent another. 

On September 14, the IRS announced “an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program” as a result of increased fraud concerns. 

IRS Commissioner Danny Werfel noted in the announcement, “The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” and said that when it comes to claiming the credit, “businesses should seek out a trusted tax professional who actually understands the complex ERC rules.”

If you decide to work with a tax professional on your Employee Retention Tax Credit application, you’ll have the resources of a team that completely understands the ERTC and tax code on your side. That could make you less likely to turn in an inaccurate claim to this important tax credit.

Claiming the ERTC? Contact Dayes Law Firm

Make claiming the ERTC easy by contacting Dayes Law Firm. Our team of ERTC recovery lawyers has already helped hundreds of businesses through this process. The ERTC for businesses is a game changer for employers who want to build business resilience. Call 866-567-4510 today for a free consultation.