What Industries Qualify for the Employee Retention Tax Credit (ERTC)?

The Employee Retention Tax Credit (ERTC) was created through the Coronavirus Relief, Relief and Economy Act (the CARES Act) to help businesses and companies whose operations were subject to a total or partial suspension of their operations due to government orders, or that experienced a significant decrease in gross revenues during the pandemic. The ERTC is essentially a refundable payroll tax credit that companies can request on the salaries of eligible employees, including qualifying health plan expenses, paid to their employees. The ERTC is available to businesses of all sizes, from small and medium-sized businesses to larger companies. However, the tax credit per employee is less for larger companies and payroll costs cannot be included.

Common examples of industries that qualify for the ERTC include distribution companies, hotels, technology companies, food service companies, franchises such as restaurants and gyms, nonprofit organizations, recreational facilities such as parks or recreation centers, and transport companies. The ERTC helps reward and support companies that were able to stay open and keep their employees on the payroll during the pandemic. It is a great way for businesses to supplement their employee retention efforts and recover from the immense impact of the pandemic. With so many business owners struggling to retain their employees, it is important to understand who qualifies for the ERTC and how it works.

Who Qualifies for the ERTC?

To qualify for the ERTC, businesses must have experienced a total or partial suspension of their operations due to government orders or have experienced a significant decrease in gross revenues during the pandemic. The decrease in gross revenues must be at least 50% compared to the same quarter in 2019.

How Does the ERTC Work?

The ERTC is a refundable payroll tax credit that employers can request on the salaries of eligible employees, including qualifying health plan expenses paid to their employees.

The amount of credit available depends on whether the employer has more than 100 full-time employees or fewer than 100 full-time employees. For employers with more than 100 full-time employees, the credit is equal to 70% of qualified wages up to $10,000 per employee. For employers with fewer than 100 full-time employees, the credit is equal to 100% of qualified wages up to $10,000 per employee.

Conclusion

The Employee Retention Tax Credit (ERTC) was created through the Coronavirus Relief, Relief and Economy Act (the CARES Act) to help businesses and companies whose operations were subject to a total or partial suspension of their operations due to government orders, or that experienced a significant decrease in gross revenues during the pandemic. The ERTC is available to businesses of all sizes and helps reward and support companies that were able to stay open and keep their employees on the payroll during this tumultuous period of time.