The Employee Retention Credit is a complex funding opportunity that can be difficult for many business owners to understand. Navigating these complexities without expert guidance can cost you the refund you deserve, up to $26,000 per employee. Some businesses were even told by their own accountants that they would not qualify, but later found out they were eligible. Below are ten examples of ways business owners mistakenly disqualify themselves from this program and lose out on thousands of dollars that could have helped their business.

1. I received a PPP loan so my business doesn’t qualify.

Your business qualifies for the ERC tax credit even if you received PPP funds in the past. The PPP and ERC programs are financial relief measures created under the CARES Act. Most businesses that applied for a PPP loan can qualify for an ERC tax credit.

2. I have been told by my tax advisors that I do not qualify.

We have helped numerous business owners claim their ERC credits - some of them were previously told that their business did not qualify. That is why we recommend you take advantage of Omega’s free consultation.‍

3. My business did not shut down during the pandemic so I must not qualify.

Your business can qualify even if it was functional during the pandemic. If your business experienced operational disruptions due to pandemic-related government orders like customer capacity limits, social distancing rules, work-from-home restrictions, etc; you are eligible for an ERC credit.

4. My business did well during the pandemic so I won’t qualify.

Your business can qualify even if it did well during the pandemic. In fact, if your business grew during the pandemic, it is still eligible for an ERC credit. A professional ERC provider can help you determine if you qualify based on business impact. All you have to do is show that your company’s operations were disrupted by pandemic-related government orders. Businesses across industries can qualify if they show that social distancing and other COVID related mandates significantly affected their operations. 

5. My yearly revenues did not decline enough to qualify for an ERC credit.

Your business qualifies based on quarterly revenue only. If your business experienced a 50% decrease in revenue from a single quarter of 2020 to the corresponding quarter of 2019, it qualifies for the credit. Similarly, if it experienced a 20% decrease in revenue from a single quarter in 2021 to the corresponding quarter of 2018, it qualifies for an ERC refund on employee wages you paid during that quarter. 

6. My business is a startup and probably won’t qualify for the ERC.

Through the Recovery Startup Credit, startup businesses founded in 2021 and earlier can qualify for the ERC. This credit provides opportunities for new businesses to receive government relief funds, however, there can be a difference in the credit amounts as the means to qualify vary. 

7. My business has expanded to more than 500 full time employees so I no longer qualify.

Your business can qualify even if it has exceeded the 500 employee limit in 2021 or beyond. The qualification is based on your employee count from 2019.

8. My company is no longer functional so I can’t qualify for the program.

If your business is not functional now but was during the pandemic, it can qualify for an ERC tax credit. 

9. It’s probably too late to file for the ERC.

You can apply for an ERC tax credit throughout 2023 and 2024. However, please keep in mind that the U.S. Congress can choose to end it earlier, so the window of opportunity can close anytime. That’s why it is crucial you file the amended payroll tax return as soon as possible.

10. I probably have to pay the ERC back to the government so I won’t apply for it.

Unlike PPP, which was a loan, the ERC is a tax credit and does not need to be repaid.

Don't Give Up!

If you have consulted a tax advisor or evaluated the ERC qualifications by yourself and concluded that you don’t qualify, we suggest you give Omega’s free consultation a try! Our experts are adept at detecting intricate details that help maximize your credit while staying within the confines of IRS guidelines.

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