Manufacturing might be the backbone of the U.S. economy, but this sector suffered major disruptions due to the COVID-19 pandemic. Very few manufacturers escaped having to perform major overhauls to the way they did business—and that was if they could keep the lights on in the first place.
Both state and federal regulators required more burdensome workplace safety regulations, and the pandemic massively disrupted supply chains. Many manufacturing executives believe it will take years before they return to normal.
Fortunately, Congress understood the difficulty that manufacturers and other employers faced in the early days of the pandemic. And to encourage them to keep workers on the payroll, Congress created the Employee Retention Credit (ERC). Too many manufacturers which continued to employ workers through 2020 and 2021 have never heard of this credit. But it can represent a considerable sum of money if you contact Sunrise Business Solutions | ERC Guaranteed today!
A Closer Look at the Employee Retention Credit
Congress created the ERC with the CARES Act in March 2020. It is a refundable tax credit which employers qualify for if they kept workers on the payroll during the pandemic. In other words, it was an incentive to businesses not to let workers go temporarily or permanently.
ERC was supposed to sunset after 2020, but Congress continued it for the first three quarters of 2021.
Unfortunately, Congress didn’t do a good job of advertising the ERC because many manufacturers have never heard of it. Still, any business that qualifies can amend their tax returns and get a refund of what they are owed.
Calculating Your ERC
ERC can represent a considerable sum of money for manufacturers. The amount you receive will depend on how many employees your company has and how much you pay them. Here are the general rules:
- For 2020, an employer can receive 50% of the first $10,000 in qualifying wages paid to an employee. That means you can get a maximum of $5,000 per employee.
- For 2021, employers could claim 70% of the first $10,000 in qualifying wages for each of the first three quarters. In total, you could receive a maximum credit of $21,000.
In all, manufacturers could get up to $26,000 per employee if they qualify! That represents much more than most businesses received for PPP1!
How Manufacturers Qualify for ERC
Your manufacturing company might claim ERC if you were impacted by the COVID-19 pandemic. Some of the ways to qualify include:
- You suffered a loss of revenue during the pandemic in either 2020 or 2021, or both.
- You experienced a full or partial shutdown due to a government order.
- You experienced supply chain delays.
In our experience, over 99% of manufacturers will qualify for ERC if they stayed open during 2020 or 2021.
Partial Shutdown of Manufacturing Operations
There is no requirement that your manufacturing business have totally shut down. Instead, a partial suspension is enough to qualify you for ERC. Given all the government mandates, most manufacturers experienced at least a partial shutdown of their operations.
Did your manufacturing company employ any of the following at the behest of the government?
- Mandatory sanitation that cut into operation time
- Required pre-access questionnaires which delayed shifts
- Temperature checks which reduced employee output
- Social distancing requirements that impacted operations
- Capacity restrictions in your plant which limited the number of workers
- Shift to virtual work for some employees which disrupted operations
- Inability to meet with clients due to travel restrictions
- Burdensome or unfavorable workplace modifications
All we need to show is that a government order or mandate disrupted your business, and we can qualify you for ERC!
Supply Chain Disruptions and Manufacturing
No industry in the country has been as impacted by COVID supply-chain disruptions as manufacturing. Our manufacturing clients have been rocked by:
- Shortages of materials and equipment sourced from around the world
- Mandatory shutdowns which interrupted the operations of key suppliers
- Supply chain bottlenecks which delay the receipt of necessary materials and equipment even when they are available
- Runaway prices for materials, services, and goods
- Worker shortages which prevent sourcing services or goods from key vendors
Pictures of container ships stranded at sea waiting to unload make for dramatic television footage. But in each container are materials or equipment that manufacturers need so they can run their business. Any delay in receiving necessary materials or equipment led to fulfillment delays on your end.
COVID is directly responsible for much of the supply chain disruptions. Many shipping companies lost employees who came down with the virus and had to quarantine. Consequently, many crews were gutted. Shipping companies implemented additional safety measures, such as required disinfecting equipment or employee testing. These measures—though motivated by safety—slowed down their work, increasing the time for delivery.
Statistics show that supply chain disruptions have proved costly. According to ITI Manufacturing, shipping rates have increased 8-9 times. That’s 900% higher than they were before the pandemic!
Fortunately, we can qualify you for ERC if you suffered due to supply chain issues! Never assume you don’t qualify!
Frequently Asked Questions about Manufacturers & ERC
There is a lot of misinformation online about ERC. We seek to empower our clients by correcting some of the most persistent myths. We have worked with manufacturers across the country to obtain ERC refundable credits, and we are here to answer any questions you have.
Can I receive ERC if I got a PPP loan?
Yes! ERC and PPP are separate programs. Congress originally prevented companies from getting both. But that changed in 2021 with the Consolidated Appropriations Act, which made ERC available regardless of whether a company received PPP. However, keep in mind that you can’t double dip the PPP wages and use them for ERC credit. We’ll calculate how much you qualify for!
Am I still eligible for ERC if my business actually GREW during the pandemic!
You can still qualify for ERC! There is no requirement that businesses lose money to qualify. A reduction in revenue is one, independent way to qualify for ERC credits.
But if you suffered a full or partial shutdown of your manufacturing business, you can still qualify for ERC. The same is true if supply side disruptions have interrupted your business. Reach out to our consultations today.
Can we receive ERC if the government didn’t order that we shut down?
Yes. A complete shutdown is only one way to qualify. If you suffered even a partial shutdown—and 99% of businesses did!—then you qualify. Government orders that impacted operations include social distancing, sanitation, PPE, ventilation, and all OSHA or state-level regulations put in place due to COVID.
Similarly, if government orders shut down key suppliers or vendors, then you likely qualify. The same is true if transportation bottlenecks as a result of COVID delayed necessary materials, equipment, or supplies. You can still qualify!
Can I get ERC if I wasn’t an essential business?
Yes. Even essential businesses were burdened or impacted by government mandates. That means you had a qualifying partial suspension of business operations. SUNRISE BUSINESS SOLUTIONS has qualified many businesses that weren’t essential.
I thought large companies were disqualified from receiving ERC?
No. We have qualified large businesses for ERC refundable credits. The calculations we use differ slightly if you had more than 500 employees. Regardless of your size, you should call Sunrise Business Solutions | ERC Guaranteed. Let us analyze whether you qualify for ERC.
How soon do we have to pay ERC back?
Never! ERC is a refundable tax credit. This is money you paid and are getting back. It’s yours to keep and spend as you please!
Will we owe taxes on ERC?
No. This is a refundable tax credit which you do not have to pay taxes on. In other words, it’s a refund of the money you paid.
What’s the deadline for applying?
Your manufacturing business should apply as soon as possible. Funds are limited, and you don’t want to wait too long.
How SUNRISE Can Help Your Business with ERC
Sunrise Business Solutions | ERC Guaranteed takes the guesswork out of ERC qualification and ensures a smooth, orderly process for submitting an amended tax return. All we need is for you to fill out some questionnaires and then send us your payroll information. We do the rest.
Don’t worry—We have all the information on government mandates which resulted in partial suspension of business operations, so we can immediately tell whether you qualify.
We’ll also discuss our fees, which are typically based on a percentage of the amount you get back in credit.
The Only ERC Specialists You Need
Sunrise Business Solutions | ERC Guaranteed knows ERC because that’s all we do. We have qualified countless businesses across the country, including large and small manufacturers. We have all the government orders and can show how they impacted your business. All we need is for you to reach out to us today and we can immediately begin calculating your ERC rebate.
We take pride in simplifying the process so that you can focus on what matters most—your business. Call us today 1-888-210-8870 to get started.