In this transcript from a video by Steven J Wick & Associates PC, Steve Wick of Steven J Wick & Associates PC in Fort Collins explains how the Employee Retention Credit (ERC) works and answers the common question: “Do I qualify for Employee Retention Credit?” He breaks down the differences between 2020 and 2021 qualification rules, including employee thresholds, gross receipts decline tests, partial suspension of operations, PPP interaction, and how much credit may be available per employee. The video highlights how eligibility depends on specific facts such as revenue reduction, government shutdown orders, and payroll timing.

To learn more about if you qualify for Employee Retention Credit and understand the specific ERC qualification requirements for your business, check out our detailed guide on Employee Retention Credit eligibility rules and revenue reduction tests.

This content is for informational purposes only and does not constitute legal or tax advice; we strongly recommend contacting a qualified CPA to review your specific situation.

00:00:17 – ERC Overview and Purpose

foreign [Music] foreign [Music] [Music] foreign [Music] program it was put in during covid to encourage employers to keep their employees and keep them off the unemployment roles and all that mess so ERC it is basically reducing your payroll uh down so it does become taxable to you it’s a way to get some money back and it’s a great program and can be worth a lot of money to a small business it doesn’t really matter the size of the business whatever the numbers are that come up is significant

00:02:01 – Employee Thresholds and Small Business Definition

amount of money so there are a lot of them that do and truthfully there are a lot of them that don’t qualify but I can’t just put everything into one basket specifically targeted to quote unquote small businesses if you’re for 2020 if you’re less than 100 employees which pretty much all of us are then you qualify in this program for 2021 it actually moved up to 500 employees somehow they figure that if you’re less than 500 employees you’re considered a small business for the most

00:02:38 – Restaurants, Non-Profits, and Eligibility

part this qualifies almost everybody’s like restaurants that’s a pretty easy one because government orders shut them down but there’s a lot of ones that because of a variety of reasons directly or indirectly that they do qualify for this too so plus one of the nice things is in 2020 non-profits were not able to get the payroll Protection Program it was only for businesses 2021 it changed slightly on that but they do qualify for ERC for the employee retention credits and so that is one

00:03:18 – Gross Receipts Test and Government Shutdown Qualification

area that hasn’t been hit hard but a lot of non-profits and you know they they do qualify for for some of these things for some of these programs you know if they’re shut down if they can show their revenues are down and and their donations and and whatever else we can we can show a lot of those things so a lot of times I’ve had a couple of them that I’ve done and they for sure qualified so [Music] foreign it’s a significant decline in gross receipts and that and we’re always

00:03:59 – 2020 Qualification Rules

comparing to 2019 similar quarters so do remember that so you had to have a 50 percent decline in your gross receipts year over year but you know and then keep your employees that was brutal okay not very many people qualified under that 50 percent unless they were basically shut down by a government order this is the other one so a full or partial suspension of operations during the year any quarter that would also qualify you so there’s other places too you just you have to think about your business like what

00:04:40 – 2021 Rule Changes and 20% Revenue Reduction

happened okay what was I shut down so 2021 they changed the rules you still look at 2019 a comparative quarters in the first quarter of 2021 you looked at first quarter 2019. and if your sales went down 20 so 80 of what you had in 2019 then you qualify for that quarter and the next quarter okay so you have to look at those and then you just kind of follow it through and potentially like how did it limit you so sometimes you can still have use of your office and things like that but because of a government order a more than

00:05:28 – Nominal Impact and Credit Amounts (2020 vs 2021)

nominal portion of your business operations might be suspended okay and so that was a new one that they put in place and what is more than normal or more than nominal effect and some of the Q and A’s they came out with it says it’s a 10 reduction in either revenues that’s like 10 of your business or it’s going to cost you a lot more to do the same amount of work [Music] 2020 10 000 of wages you’ll get up to five thousand dollars in credit if it’s more than ten thousand it’s only

00:06:13 – Credit Calculations and PPP Interaction

the first ten thousand okay and then you hit fifty percent or five thousand in credits for the whole year 2021 again it’s it that ten thousand dollars of wages but it’s by quarter now and that’s up to seventy percent for that first ten thousand foreign [Music] Congress looked at it and they says well why didn’t people do the ERC and like I said it was mostly the either or thing so they says well we’re Congress we can change the rules and so they allow businesses to have both PPP and ERC

00:07:00 – Using ERC with PPP Forgiveness

so that’s primarily where we we’re getting them for our clients you cannot use the same payroll dollars that you used for your forgiveness for PPP but we can get others so generally speaking if you remember is that the PPP 13 15 weeks is what the payroll kind of covered and depending upon how you you worked your forgiveness package you know that’s what was kind of put in place and so if you got let’s say you got your PPP April 1st basically it took you through that second quarter so all of that

00:07:41 – Educating Yourself and Avoiding Misinformation

payroll is wiped out but we can still look at ERC for the third and fourth quarter still today even with the advertising campaigns and everything else that we get hit with people think it’s either junk or they says oh that’s not me and my biggest point today is just to say it may be you make sure that you educate yourself and then there’s a lot of Miss information out there from the telemarketers and other places that are just slamming your email and whatnot I’ve received probably at least 50 if not 100 of them

00:08:28 – Professional Guidance and Next Steps

but I know a lot of them going to the spam junk mail folders but we submit I want to say at least 100 man hours studying this reading about it taking coursework um putting systems and processes in place and a lot of accountants you know they were busy with you know tax season and whatever else they do they just decided not to do it I would encourage people watching this going like I wonder call us and we’ll put you through the tests see if you qualify and love to work with you as we go through