Is ERC Only For Full-Time Employees

You’re puzzled, asking, ‘Is ERC only for Full Time employees?’ It’s a complex issue, but you’re not alone in this confusion.

This article is here to help, breaking down the specifics of the Employee Retention Credit (ERC aka ERTC). We’ll debunk common misconceptions, clarify the role of full-time employees, and show you how to optimize this financial aid for your business.

Let’s untangle the intricacies of the ERC together.

Is ERC only for full time employees?

Contrary to what you might think, the Employee Retention Credit (ERC) isn’t just for full-time employees. It’s a common misconception that might prevent many businesses from taking full advantage of this beneficial program.

The ERC, introduced in response to the COVID-19 pandemic, is designed to help employers of all sizes retain their workforce, irrespective of whether the employees are full-time or part-time.

As an employer, you’re allowed to include wages paid to both part-time and full-time employees when calculating the ERC. There’s no differentiation between the two in the context of this credit. The only limitation you might encounter pertains to the amount of wages and health plan costs you can consider. You can calculate the credits on the first $10,000 of such costs paid to each employee during each credit-generating period.

The application of this credit isn’t restricted by the number of hours an employee works weekly or monthly. Whether your employees work over 30 hours a week or less, their wages can contribute to your ERC calculation. This flexibility facilitates businesses of all sizes and structures in retaining their staff during challenging economic periods.

So, don’t let the misconception deter you from claiming the ERC. Whether your workforce is full-time, part-time, or a mixture of both, you’re eligible to calculate the ERC based on their wages and health plan costs. Remember, it’s not the employment status, but the first $10,000 of the wages and health plan costs that count.

Claiming your ERC benefits could aid your business’s financial health during these trying times.

Who Qualifies for the ERC?

First criteria is you need to have W-2 employees.

Building on the understanding that both full-time and part-time employees count towards the ERC, you might be wondering exactly who qualifies for this credit? Well, it’s not solely based on the number of employees. In fact, it depends on several factors tied to the impacts of the COVID-19 pandemic.

Your business may qualify for the ERC if its operations were fully or partially suspended due to government-imposed COVID-19 restrictions such as an order limiting commerce, travel, or group meetings. Partial suspension of operations could mean that a significant portion of your business operations couldn’t be performed remotely in a comparable manner, or that operations continued but were modified significantly impacting business operations.

Another way you could be eligible is if your business experienced a significant decline in gross receipts during 2020 or in the first three quarters of 2021. When considering gross receipts, compare the quarters in 2020 or 2021 to the same quarter in 2019. For instance, if you’re determining eligibility for Q2 2021, compare your gross receipts in Q2 2021 with Q2 2019. Alternatively, you could use the preceding quarter’s gross receipts to establish eligibility. For example, a sharp decline in Q1 2021 gross receipts (compared to Q1 2019) makes you eligible in Q1 and Q2 2021.

Furthermore, if your business was a new startup that kicked off operations after February 15, 2020, you could qualify, irrespective of your revenue.

Depending on the size of your company and the number of your employees, the ERC credit can be significant. From March 13, 2020, to December 31, 2020, you can claim up to $5,000 per employee. This amount increases to $21,000 per employee for the period from January 1, 2021, to September 30, 2021.

In short, eligibility for the ERC isn’t limited to full-time employees. It’s about how your business has been affected by the pandemic and the steps you’ve taken to retain your workforce.

If you received funds from the Paycheck Protection Program you might still qualify for the Employee Retention Credit

Even if you’ve already received funds from the Paycheck Protection Program (PPP), you might still be eligible for the Employee Retention Credit (ERC).

With the Consolidated Appropriations Act of 2021, PPP recipients can apply for the ERC retroactively. However, wages paid with forgiven PPP loan proceeds can’t be included for ERC purposes. But don’t fret, wages in excess of the PPP loan proceeds may still qualify for the ERC. This means your business could receive additional financial support.

It’s a complex process requiring careful planning and accurate calculations, but the potential benefits could be significant if you are eligible. T

Conclusion

In conclusion, the ERC isn’t just for full-time employees. It provides financial relief to businesses of various sizes and workforces.

Understanding who qualifies for it can be pivotal for your business survival during tough times.

Remember, every bit of support counts in weathering the storm of the global pandemic.