8 Common Reasons for Businesses to Qualify for Employee Retention Credit or ERC

ERC or Employee Retention Credit is a tax credit program for employers who have retained their employees on payroll during the time of COVID restrictions. This program is put forward by the government under the CARES Act to encourage employers to provide more job opportunities. However, there are certain eligibility criteria businesses should meet to qualify for ERC. Click here to learn more about the eligibility criteria for claiming ERC benefits.

Here are 8 common reasons why businesses may qualify for Employee Retention Credit tax benefits.

  • Cleaning and sanitizing

COVID restrictions made it necessary for businesses to invest their resources in cleaning and sanitizing. There were safety protocols put forward for businesses to follow to prevent contamination. In cleaning and sanitizing, some employers may have to spend extra money on equipment or materials like paper towels, cleaning solutions, disinfectants, and other necessary related items for safety reasons.

  • Capacity Restrictions

During this time, employers were forced to cut down the production capacity of their businesses. If the production capacity of your business is less than what you need to run your business, it will be difficult to maintain a significant count of employees.

  • Supply chain disruptions

COVID guidelines required other businesses to temporarily suspend their business activities during the COVID period. Consequently, these businesses will be facing disruptions in their supply chains which might affect the production capacities of other businesses.

  • Travel restrictions

Businesses that are involved in international trade or rely on shipments from outside the US have been placed under travel restrictions. As a result, businesses that use shipments from outside the country may not be able to accomplish their business goals due to these restrictions.

  • Work from home orders

Many employers ordered their employees to work from home during the restriction. This was because it was also necessary for the business to maintain its production capacity as well as staff. On top of that, reduced staffing may have caused a loss of productivity or reduced sales.

  • Full or partial shutdowns

Many employers were forced to shut down their businesses during the downtime period. This was because their businesses were unable to fulfill COVID’s requirements, and there was no other choice left but to close the business. If you were one of those employers, you may qualify for ERC benefits.