Does the Business Size Influence How to Apply for the ERTC?

June 7, 2023
Dayes Law Firm

As a business owner, you may have already heard about the Employee Retention Tax Credit, also known as the ERC/ERTC. But if you haven’t applied for the credit, and don’t know the particulars of the program, you may not know that the size of your business can influence how you apply for the ERC tax credit – or even if you’re eligible to do so.

What is the ERC?

The ERC is a fully refundable payroll tax credit created as part of the CARES Act. It provides a financial incentive to businesses that kept paying their employees during the worst of the COVID-19 pandemic. 

The credit offsets the quarterly employment taxes businesses are required to pay, and many businesses are eligible to apply for it. But the size of your business – particularly the number of employees you have – can impact how you go about applying for the ERC. 

Who Qualifies for the ERC?

Many businesses can claim the Employee Retention Credit if they experienced a significant decrease in revenue due to COVID-19 and if the business in question experienced a full or partial suspension of operations due to government orders.

Businesses must have experienced these issues between March 12, 2020, and September 30, 2021, and paid wages during that time. However, certain businesses had until December 31, 2021. Recovery start-up businesses, as defined by the IRS, can also claim the credit for wages paid during the final quarter of that year.

Although that eligibility period is over, a skilled tax professional can help you and your business retroactively apply for the credit if you qualify. 

Business Size and ERC Eligibility

This credit is especially helpful for smaller businesses, and business size does impact eligibility for the Employee Retention Tax Credit

The ERC is applicable to businesses with 100 or fewer full-time employees in 2020, according to the IRS. At that time, large employers were considered businesses with more than 100 full-time employees.

However, the number of employees allowed for the business to be considered a small employer increased to 500 or fewer full-time employees in 2021. But what about employees who don’t work full-time?

FTE and the ERC

It’s extremely important to know who qualifies as a full-time employee for the purposes of the ERC. According to the IRS, a full-time equivalent employee (FTE) is an employee who works, on average, at least 30 hours per week or provides 130 hours of service per month. 

Determining your official employee count regarding how many staffers are relevant for those ERC numbers is crucial. You might be able to qualify even if you have more than 500 employees if you can work out how many are FTE, and a tax lawyer or a skilled ERC team – like the one at Dayes Law Firm – can help you do that. 

The Dayes Law Firm ERC Team

At Dayes Law Firm, our ERTC team has navigated the ins and outs of the Employee Retention Credit program for quite some time. We have already helped many business owners with their ERC applications and have an incredible record of success with claiming ERC refunds. In fact, Dayes Law Firm and its partners have helped business owners file for more than $250 million in refunds so far!

Give us a call or fill out the form on this page to see how we can help you determine the size of your business for the purposes of ERC eligibility. Our free, no-obligation consultation offers a way for us to discuss all your ERC options with you and decide how to best move forward with your application. 

Contact us today online or call us on 1-800-503-2000 and see why so many businesses have already turned to Dayes Law Firm for ERC assistance.