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Who Qualifies for Employee Retention Tax Credit?

In March of 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed into law. The statute includes the Paycheck Protection Program (PPP). According to the federal government, more than11.8 million PPP loans were issued as of June 2021.. The CARES Act also included another critically important, but far less well-known economic incentive to encourage employers to keep workers on their payroll: The Employee Retention Credit (ERC). As of March 2022, the law changed to allow businesses to claim both PPP & ERC.  

At Sunrise Business Solutions, we help businesses and organizations from every industry qualify for the maximum available financial benefits through the Employee Retention Credit (ERC). Our team of ERC specialists wants to make sure that you have all of the tools and resources that you need to protect your best interests. Here, you will find an overview of what you need to know about how businesses can qualify for the ERC. 

What Businesses Need to Know About Qualifying for the Employee Retention Credit (ERC)

The Employee Retention Credit (ERC) is a fully refundable tax credit. It is one of the primary economic tools that the federal government used to try to encourage businesses and organizations to keep employees on their payroll and to reward the companies that actually did so. Here is how it works. A company can apply for and qualify for an ERC benefit if it retained employees and one of the following two things occurred for any quarter: 

  1. It was subject to a full or partial suspension of operations due to a government public health order (Essentially All businesses had a partial suspension of some sort for eq. CLeaning and sanitizing, capacity restrictions and much more see below); or
  2. It saw a decline in revenue when compared to the same quarter in 2019. 

To qualify in 2020 on revenue loss grounds, a business or organization must have had a 50 percent decline in revenue. However, businesses and organizations can qualify for the ERC for 2021 with just a 20 percent loss in revenue. Revenue loss is not a requirement. 

There are also some additional nuances that could allow more companies to qualify. The ERC is a significant benefit. It is available for six total quarters (last three of 2020 and first three of 2021) and it could provide a maximum of $26,000 per employee

Note: You can still qualify for the ERC tax credit if you filed for PPP funds. The Paycheck Protection Program and the Employee Retention Credit both arise from the CARES Act, but they are two separate economic support programs. Companies that filed for PPP benefits can also file for the ERC tax credit. Likewise, companies that opted not to seek PPP funds can file for the ERC.

Businesses for All Industries Can Qualify: An Overview of the Most Common Reasons

If your business or organization was suspended, subject to capacity restrictions, or otherwise financially disrupted by the COVID-19 pandemic (99% of all businesses), it is crucial that you have your ERC eligibility reviewed and evaluated by an experienced ERC professional. At Sunrise Business Solutions, we guarantee ERC qualification in 60 seconds, and will make sure you claim all 6 quarters.

Here are ten of the most common reasons how businesses qualify for financial benefits through the Employee Retention Credit (ERC): 

  • Cleaning and Sanitizing: The COVID-19 pandemic and public health regulations and your own company’s internal safety protocol dramatically increased the amount of resources companies had to put into cleaning and sanitizing on a hourly, daily, weekly routines. 
  • Capacity Restrictions: Was your business subject to capacity restrictions in 2020 or 2021 due to COVID-19? We have the capacity restriction government orders that counts as a partial suspension of operations. It allows a business to qualify for the ERC on those grounds. 
  • Supply Chain Disruptions: The pandemic caused huge supply chain disruptions and delays. This poses major challenges for businesses and organizations. In some cases, supply chain crunches were from delays to even being led to a loss of total revenue for a specific job or project due to the significant delays. A supply chain-related issue can qualify a company for the ERC. 
  • Travel Restrictions: Travel reactions caused disruptions for many businesses—from tourism to transportation to retail. Companies subject to travel restrictions may be able to qualify for the Employee Retention Credit. 
  • Commerce Disruptions: Commerce in the United States was fundamentally altered by the pandemic. Both capacity restrictions and public hesitance resulted in fewer people shopping in person at brick and mortar retail locations. Businesses and organizations impacted by commercial disruptions can file for the ERC tax credit. 
  • Group Gathering Limitations: Many state and local governments had group gathering limitations in place for long stretches of 2020 and 2021. Many industries were adversely affected by group gathering limitations. Conventions, conferences, to banquet halls.  You can apply for the ERC if your business was hurt by group gathering limitations.    
  • Vendor or Customer Restrictions: Even if your business was not directly restricted by a government order, it may have felt the negative effects of a restriction being placed on your vendors and/or your customers. Companies may be eligible to obtain a tax credit through the ERC if they suffered major revenue losses because of issues with vendors, suppliers, or customers.  Examples of this are hospitals having to restrict and stop elective surgeries which affected not only those surgeons but the subsequent care of all types of therapists and home health care agencies to Nursing homes that have entry restrictions.  
  • Jobsite or Customer Shutdowns: Specific job sites and customer shutdowns were also an issue for companies and organizations during the pandemic. As an example, a positive COVID-19 test by an employee may have required a company to temporarily suspend or restrict operations to comply with public health and safety results. This could be grounds to qualify for an ERC tax credit.  
  • Work from Home Orders: Work from home orders put a tremendous strain on many businesses and organizations. An employer subject to a state or local work home order in 2020 or 2021 may still be able to qualify for a tax credit through the ERC.
  • Full or Partial Shutdowns: As drafted in the CARES Act, the Employee Retention Credit clearly allows employers subject to full or partial suspension of their operations due to a government order to obtain a tax credit to keep workers on their payroll. 

The COVID-19 pandemic and the public health restrictions from federal, state, and local governments impacted nearly every business in the county. Every industry and every situation is different. It is important to emphasize that a business can qualify for ERC benefits based solely on a revenue decline in any of the last three quarters of 2020 or the first three quarters of 2021. 

Why Choose Sunrise Business Solutions for Help Qualifying for the ERC 

The Employee Retention Tax Credit provides a much needed form of financial support and compensation to the businesses and organizations that kept paying workers despite the fact that they were facing pandemic-related financial challenges. Applying for the ERC can be complicated and confusing. You do not have to navigate the process alone. Do not assume that your business cannot qualify for ERC benefits. At Sunrise Business Solutions, our specialists are standing by, ready to help. We make things as easy as possible: 

  1. Risk-Free Analysis: 60 Seconds phone call qualification Guarantee. You can get a risk-free Employee Retention Credit analysis with Sunrise Business Solutions. All you need to do is to submit some key documents. We will take care of it from there, reviewing your case to determine eligibility. You never pay anything unless you qualify for the ERC. 
  2. Calculate Your Benefits: Most businesses and organizations can apply for six quarters worth of ERC benefits. At Sunrise Business Solutions, we help clients with every quarter. Our goal is to maximize your Employee Retention Credit. You may recover 30 percent to 100 percent more than with our competitors.  
  3. Take Care of the Application: You do not have to worry about the complexities of filling out an ERC application. Our ERC specialists have the knowledge, experience, and expertise that you can trust. We will take care of the entire application process—and you are fully protected by error and omissions insurance. 
  4. Get Paid: Once your Employee Retention Credit application is submitted, you just have to wait to get paid. The ERC is paid out as a refundable tax credit—that means a check for each quarter that your business is eligible will come from the IRS. Unlike PPP funds, ERC funds are unrestricted. You can use them for whatever you want. 

It is important to emphasize that it is not too late to file for the Employee Retention tax credit. While the credit applies to the final three quarters of 2020 and the first three quarters of 2021, all businesses and organizations still have time to apply—even if they have already submitted their tax information to the IRS. The CARES Act gives companies three years to review their finances and submit amended details to claim the ERC. You can still file for the ERC for 2020 and the ERC for 2021 in 2022. 

Speak to an Employee Retention Credit Specialist Today

At Sunrise Business Solutions, we specialize in the Employee Retention Credit. If your business or organization suffered COVID-19 related losses or disruptions in 2020 or 2021, you may be entitled to a refundable tax creditor from the IRS—that means cash in your pocket. If you have any specific questions about how businesses qualify for the ERC, we are here to help guide you through every aspect of the application process. Give us a phone call at (888) 210-8870 or contact us online to set up a confidential, no obligation initial appointment.