How Many Employees Do You Need to Qualify for ERC?

July 14, 2023
Dayes Law Firm

Although many businesses have taken advantage of the Employee Retention Tax Credit since it was implemented as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed in March 2020, business owners who haven’t applied for the ERC/ERTC may still have questions about qualifying for the tax credit

If you haven’t yet applied for the ERC because you’re unsure of whether your business qualifies based on factors like business type, the business’s decline in gross receipts during COVID, or how many employees you need to qualify for the ERC, rest assured that at Dayes Law Firm, the team of ERC specialists have the answers you’re looking for. 

Number of Employees

There are indeed guidelines regarding how many employees you need to qualify for the ERC. There are both minimum and maximum requirements that you need to be aware of if you want to apply for the Employee Retention Tax Credit, although the type of employee counted toward these totals can make things complicated.

Ultimately, business size does influence eligibility for the credit – and the tax year you’re applying impacts whether you can qualify based on the number of employees. For instance, according to the IRS, the ERC is applicable to businesses with 100 or fewer full-time employees for the year 2020. Large employers were considered businesses with more than 100 full-time employees.

However, when you’re looking to amend tax returns for 2021, the number of employees allowed for the business to be considered a small employer increased to 500 or fewer full-time staff members. 

Notably, your business might be able to qualify for the ERC if you have more than 500 employees if you can work out how many are FTE – full-time equivalent employees. According to the IRS, these are employees who work, on average, at least 30 hours per week or provide 130 hours of service per month.

As long as your business employed at least one person (besides yourself) during the qualifying period of wages paid from March 13, 2020, through December 31, 2021, you may be authorized to apply for the ERC. But to be sure that you qualify and to avoid any difficulties with the IRS, it might be a good idea to seek assistance from an ERC team of tax professionals

ERC Team at Dayes Law Firm

At Dayes Law Firm, we can offer a free, no-obligation consultation to discuss the needs of your business when it comes to the Employee Retention Tax Credit. Our team will work with you to work out the particulars of your qualification and application, including the number of FTE employees you need to qualify for the ERC. 

Dayes Law Firm and its partners have comprehensive experience when it comes to helping businesses with the ERC. We have supported business owners in filing for more than $250 million in refunds so far, and we are confident we can help you and your business, too. 

Please don’t hesitate to give our team a call or fill out the form on this page to see how we can assist you with your ERC needs. Contact us now to see how the ERC team at Dayes Law Firm can make the entire qualification and application process easier for you, and why so many businesses have already turned to us for assistance. We look forward to hearing from you!