How Does Missing Out on ERTC Claims Affect a Small Business?

January 19, 2024
Dayes Law Firm

Has your business claimed the ERTC? If you haven’t, are you sure aren’t eligible?

Many business owners misunderstand ERTC eligibility, leading them to avoid claiming the credit. But if your business is eligible, you could gain up to $28,000 in tax credits per employee. That’s a sizable sum that can significantly benefit your business.

Don’t miss ERTC deadlines, which are fast approaching in 2024. Learn how missing out on filing an ERTC claim could affect your business’s sustainability, plus some common misconceptions about the ERTC.

How Can the ERTC Benefit the Sustainability of Your Business?

The Employee Retention Tax Credit (ERTC), otherwise known as the Employee Retention Credit (ERC), is a credit available to eligible employers who experienced a full or partial suspension of operations due to COVID-19 and had a significant reduction of gross receipts as a result. Through this credit, you can claim up to 70% of qualified wages for all four quarters in 2020 and the first three quarters in 2021.

The ERTC isn’t just a small tax credit to reduce your tax liability. Depending on the size of your business, it could be worth tens or even hundreds of thousands of dollars. This tax credit is also refundable, which means that if it exceeds your tax liability, you’ll still gain the full amount the IRS owes you.

Your small business can use your money from the ERTC program for any of the following:

  • Purchase new equipment
  • Fund a new product line
  • Enhance employee benefits
  • Offer employee bonuses
  • Build your savings

All of these processes can help you grow a more sustainable business.

Ways You May Be Missing Out on the ERTC

Do you believe your business isn’t eligible for the ERTC? Don’t miss ERTC eligibility guidelines that could allow your business to qualify for this credit. Eligibility requirements vary between 2020 and 2021, and even if your business wasn’t eligible in one year, you may be able to claim this credit for the other year.

These are a few common ways your business may be missing out on the ERTC.

You Believe PPP Loans Make You Ineligible

Good news: you can still claim the ERTC even if you claimed PPP loans. The Consolidated Appropriations Act of 2021 removed this limitation for businesses, allowing them to claim both pandemic-related benefits.

However, you can’t claim the ERTC for the same wages you claimed in your PPP loan application. If your business has other qualifying wages, you can use those for the ERTC.

Your Business Is a Nonprofit

Certain nonprofits qualify for the employee retention tax credit. You’ll just need to meet the qualification criteria like any other type of business to be eligible — namely, experiencing a significant decline in gross receipts and being subject to a full or partial suspension of operations due to COVID-19 shutdowns.

Your Business Grew During the Pandemic

If you didn’t experience a significant decline in gross receipts but instead grew your business during the pandemic, you may still qualify for the ERTC. Your business may have been negatively impacted in some other way due to a suspension of operations, and you may be able to use that criterion to qualify.

Seek ERTC Guidance From Dayes Law Firm

Your small business may qualify for tens of thousands of dollars in tax credits.

Don’t miss ERTC eligibility; talk to a tax professional about whether your business qualifies for this credit.At Dayes Law Firm, our tax attorneys have helped numerous small businesses use the ERTC for growth and sustainability. We’ll help you determine your eligibility for this tax credit, then guide you through the application. Contact us today at 800-503-2000 for your free consultation with a tax attorney.